House flipping is the act of purchasing a home at low market value and performing repairs or completing a renovation on the home before reselling it for profit. This type of real estate investing is great for hard workers who enjoy working with their hands and learning about the ever-changing industry of real estate.
But first, one must learn flipping 101—how to choose the right property to flip, for starters. After all, you cannot convert a home until you understand which property is best for your goals and business.
Determine Your Goals
Before stepping into the real estate industry, you must first identify your goals for working in this industry. Are you looking for long-term work, or are you hoping to make a quick profit? Real estate can accomplish either—depending on the property you choose to invest in.
Try to determine if you’d like to invest in residential, commercial, or raw land. Each property is entirely different and can benefit an investor in many ways.
If you enjoy house flipping because you want to help create more space for families to live in, great! Everyone has their own reasons for building a house flipping empire. Once you determine yours, you’re already off to a great start.
Increase Home Improvement Skills
The next step is to improve your remodeling skills because once you purchase a property, you’ll want to get to work as soon as you can.
You’ll need to know how to do many things when repairing and upgrading the home, such as plumbing, electrical, roofing, and more. Understanding the home’s mechanics is critical to finding success.
Try taking classes online or teaming up with your fellow home improvement freelancers to learn more about the craft and what it takes to do the job right. You can even partner with interior designers who may know a bit more about making the home look aesthetically pleasing. This will allow you to meet new people and, potentially, other investors who can help you accomplish your goals.
Network With Other Investors
As stated above, networking with other investors will create more opportunities for you to meet new people, hone your skills, and expand your business. When you work with others in the industry, you’re not only building your network, but you’re also creating more resources, deals, and (overall) your empire.
Establish your website and make sure your clients can navigate it. Also, make it easy for them to contact you for potential deals. Connect with others via social media and various digital platforms as well. Creating a robust online presence will enable you to network with more investors and experts in the real estate field.
A great tip is never to leave home without your business cards. When you connect with another investor, you must provide them with a way to stay in touch.
Figure Out Financing Options
The next step you may want to take is to figure out your financing options. Many lenders will help you reach your business goals; it just takes finding the right one for you.
This type of loan allows you to finance your real estate investment outside of traditional banking loans. Note that this loan gives you more freedom, but the interest rates may be higher than more standard loans.
Hard Money Loans
Hard money loans enable you to finance a property investment based on the property itself rather than your creditworthiness. This loan offers quick funding but, like private loans, also consists of higher interest rates.
Work with your nearest hard money lenders in Oklahoma City to get quick financing and correctly fund your next real estate property.
You can also purchase an investment property by adopting a personal loan. In this case, you’ll have a secured loan from a bank and get the funding you need for your property.
Research the Location
When deciding to invest in real estate, thoroughly research the location before making any decisions. Often, the property’s location determines the value, price, and resale flexibility.
For example, it may be challenging to purchase a home in an upscale neighborhood at a low price and flip it for way above market value.
Get to know the location—would you move your family to this location? If not, chances are, it may be harder to resell to other families.
Partner With a Realtor
If you’re unsure about a location or neighborhood, try partnering with a realtor who may know behind-the-scenes information about the area.
Networking with a realtor is just one of the skills you must have to succeed in real estate. A realtor can bring additional resources to the table, including another perspective on your investment property.
Utilize the MLS System
The multiple listing service (MLS) is a database invented by real estate brokers that lists all properties on sale in a specific location and the property’s statistics.
Utilizing the MLS database will give you an advantage over other investors, as you’ll see more information about the property on MLS than you will on other sites.
Analyze the Market
Before you make your purchase, analyze the real estate market for changes, trends, and patterns. This will help you to make an educated choice and determine which property you should purchase.
Researching the market will also enable you to decide whether to buy, sell, or hold the investment property you’re looking at. This will help you judge if a potential property is profitable and improve your investment strategy to benefit your business.
Mistakes To Avoid
There are a few things you must consider (and even avoid) when preparing to invest in a real estate property. For example, patience is critical.
The real estate industry is all about timing; it takes time to research the market, finance, repair, renovate, network, and determine profit margins for resale. Although you can complete these steps rather quickly if you’re a real estate professional with years of experience, it may be more challenging to do as a beginner. So you should work to avoid getting in over your head; there’s no need to rush on your first project.
Additionally, many investors assume that all state laws are the same for house flipping; this most certainly isn’t the case. Be sure to research the state laws where you’re house flipping to avoid making any legal mistakes.
Understanding how to choose the right property to flip can be a challenging task if you’re unsure of what to do. But with the above tips, you’ll be successful in your business venture and continue to build your real estate empire.