When it comes to making money, one of the golden rules is to go with something that is in high demand. For example, selling food (such as in a restaurant or cafe) is going to be much easier than trying to sell a painting you made. Food is an essential product for our daily lives while a painting isn’t necessarily something people would buy. Sure, you could make a lot of money selling art, but the likelihood of starting a successful business is much lower than trying to sell food.
So when you’re tasked with picking a product to sell, one of the most in-demand yet expensive products you could offer is a house. But how exactly do people make money from a selling property? Do they need to be professional property developers or can you do it as well? Do you even need some kind of special skills to buy and sell a property? In this post, we’re going to cover some of the most common concerns that people have when they first get started with flipping houses.
As with many other business ideas, making money requires you to have money in the first place
Buying and selling property obviously requires you to have money in the first place. You “flip” properties by buying a home at a relatively low price, fixing it up and then reselling it. It’s similar to the idea of buying electronics, fixing them and then reselling them as refurbished goods. Except instead of buying a small and affordable device, you’re buying an entire house.
So how exactly do you finance a flip? One way is to use a mortgage to flip a house. Sadly, this is frowned upon by lenders and they might notice you doing this. You could get away with it after you’ve sold the property (since there’s not much they can really do about it) but if you try it a second time, the lender might refuse to lend to you again. To make matters worse, they might even share that information with other lenders. After all, lenders are supposed to make money from you, not the other way around.
As such, the only realistic way to flip a house on a regular basis is to just have the money available. You can look for a cheap house for sale if you’re starting on the low end, but you could also refurbish different offices and commercial properties to get started. Keep in mind that you can also start a joint venture to flip houses with a partner if you personally don’t have all of the funds available. With that said, flipping a house is certainly not cheap and is something you should only consider if your financial situation is stable.
Understanding your market is the key to being a successful flipper
Like any other business, it’s important to understand the market and your audience if you want to be successful at flipping houses. You should understand what the local property market is like, what the most popular homes are and also how much you can expect to pay for renovations. This will help you determine a final selling price for the house you plan to flip. You’ll have to do plenty of research in this regard to help you figure out how much you should be paying for different kinds of services, and you’ll need to calculate the potential profit you stand to make.
Of course, you could always do everything yourself. Renovating a house by yourself isn’t the most difficult thing ever, but it’s certainly time-consuming. One of the perks of doing it yourself or with a small team is that you’ll eventually build up the skills and experience needed to do it quickly. This can help you secure more profits since you won’t be paying a service to do the work for you.
As a general rule of thumb, the less you pay for a property the more potential it has to flip for a higher price. However, that also means that it comes with more work involved. Some of that work could be related to utilities and other systems that you might be unfamiliar with. This means you should also relate the potential profit to the amount of work and experience you need to get the job done. As such, we can’t recommend that you try to flip a run-down house that needs its electrical wiring and utilities fixed. However, if it’s just simple renovations and decor arrangements, then it’s certainly something you can do with little experience.