Zillow just lost big in the house flipping business. The company bought more than 7,000 homes and stands to lose $300 million.
If a company like Zillow can lose in house flipping, you might question whether this is a good time to invest in real estate.
It is, and you can learn the lessons from Zillow’s and other investors’ failures. Know that flipping houses is a viable business, but you have to treat it as such.
It’s not a TV show, and you need to have a solid foundation to build your business. Fortunately, you’ve come to the right place. Keep reading this guide to learn how to start your own real estate business buying houses and flip them.
1. Market Research
Do you know what makes a good house flipping property? The answer is always to buy real estate low and sell properties for more than you paid.
It’s not as simple as that, especially in this real estate market. Home prices increased over the last year by 18%. If you buy a home now, you could stand to lose money if the real estate market is in a bubble.
You’re going to take on expenses to renovate the home and pay a mortgage in the meantime. Those figures need to come into your calculations. For your first flip, look for homes that need minor repairs.
Research your local real estate market. Learn what types of homes people are buying now. Look at the features they want in a home.
2. Line Up Financing
The best thing about real estate investing is that you leverage other people’s money to make the investment. Of course, you have to qualify to obtain financing.
Make sure your credit is in good standing so you can get approved quickly. Pull your credit report. The two best ways to get your credit score up are to pay down existing debt and repair credit report errors.
Visit your bank or local credit union for loans. You can also turn to peer-to-peer lenders and online lenders.
3. Create a Sales Strategy
Your ability to make a profit depends on knowing the fastest way to sell a home. You should have a sales strategy lined up before you make an offer on the home.
Your calculations showed you how much you can profit from the sale. What will you do to maximize the value of the home?
This is why knowing what buyers want is so important. You can focus your renovations to give buyers exactly what they’re looking for.
It makes your property more desirable and easier to sell.
An Introduction to House Flipping
House flipping can be a viable business, but success isn’t guaranteed. It takes a lot of work and effort to make a profit. Most of all, it takes a deep understanding of the local real estate market and what buyers want.
That puts you in a position to buy the right property at the right price. Now that you know about house flipping, take a look at the other articles on the blog for home improvement tips.