There are many ways to make money in this world, depending on what your specialty is. Some people have skills and education that demand a high wage (such as doctors and lawyers), while others must rely on their wit, intelligence, and business savvy in order to turn a profit through a myriad of different talents and trades. Having an education is not always required to make money, despite what you may have been led to believe. People trade stocks, bonds, and commodities from their bedrooms while others must practice business litigation law from a fancy corner office while wearing an expensive suit and displaying their legal degree.
One underrated and less commonly talked about way to make money in this world is through buying and restoring residential property, sometimes called “house flipping.” Depending on where you look up house flipping statistics, it can either seem like a perilous enterprise fraught with nothing but risk, or a piece of cake. In reality, it is neither and both at the same time. For every would-be real estate investor who thinks they know their stuff, there is another who gets in way over their head and loses everything (including the property that they just bought). It is worth knowing the risks and rewards before going into this type of activity as a financial endeavor.
In this article, we’re going to touch on some of the interesting ways that residential home buying can become a cash cow for regular individuals. We’re going to warn against tricks and bad ideas, while propping up tips and suggestions that should be able to help anyone. With a lot of hard work and some know-how, anyone can use residential properties to skew the house flipping statistics in their favor and come out on top. Who knows, it might even become your new source of income.
Identifying Properties to Buy
So you’ve decided to invest in a property somewhere, but may have hesitations when it comes to finances, knowledge, and other areas. This is understandable, as approximately 62% of Americans have less than $1,000 in savings and don’t know where they would get the down payment on a house. However, if you have other pieces of equity (car, boat, current house, etc) and a great credit score, you can bypass a lot of this right off the bat and probably qualify for an amazing home loan. If you’re willing to incorporate as an LLC, you may even be able to qualify for a small business loan from the small business administration of the US government. There may also be tax breaks or other incentives as well, so it’s worth exploring.
As you’re looking at properties to buy, you can fly solo or entrust the services of a trusted real estate agent to help you out. What you’re specifically looking for is undervalued properties or up-and-coming properties in developing neighborhoods. Every so often you will find an amazing neighborhood with a neglected property, but this is relatively uncommon. Many of the properties you find will be in various states of disrepair, and you will very quickly have the numbers of several trusted local plumbers on speed dial, depending on what neighborhoods they service. Finding distressed or unwanted properties is a bit of gambling game, and what you find online might not match what you see in person. Above all else, be patient and willing to be disappointed more often than not. Eventually, a gem will appear if you only know how to identify it.
When planning to purchase a residential property, be smart about all your decisions and think far into the future. All one has to do is look at a variety of house flipping statistics to be scared straight on the difficulties of such an endeavor. Make sure to plan for the longest loan and lowest monthly payment possible, to ensure that you always have enough cash flow to make repairs and improve the property in the short term. You should always prepare for the worst case scenario in which you cannot sell the house and simply must own it (perhaps as a rental property) outright in the long term. There are many worse situations to be in than owning another home.
Inspect the Home Before You Buy
You may have found the “perfect” property, or so you thought. If you haven’t done a quality inspection or a basic hard water test, you can’t really be sure of anything when it comes to residential properties. Depending on your area and the local laws, homeowners may only be required to list certain attributes of their homes and what condition they are in. Since homeowners looking to sell are incentivized to make the property appear as amazing as possible, it is understandable they might neglect to tell you about some things.
When you’re interested in buying a property, always get a home inspector to come out and appraise/inspect the property for you. Even if you’re well versed in residential properties or used to be a contractor, you want a licensed and legal inspector to provide the paperwork you need in order to justify any complaints you might have. Little things, like hiring a residential garage door service to inspect the door, can save you lots of money in the long run after the original owner has gotten their cash and exited.
While it’s not brought up in house flipping statistics at all, always remember that you can interview the current homeowner about their experience with the property. Anything is on the table, really. From asking if the house is haunted to querying about the neighborhood and night activity, you don’t have to just focus on the actual structure of the house. When you probe this deep, but keen interest, many homeowners may find that they would be willing to offer you a deal in order to hand the property over to someone who clearly wants it and is ready to buy instead of responding to offers from real estate agents or emails. You can learn valuable information from the current homeowner that you’ll never find on any real estate website or listing, and this will only further or dissuade your decision to purchase the property.
Customize, Accessorize and Modernize
The house flipping statistics don’t lie: more homes sell when they have modern features and custom additions than standard houses. Just like the inspections that we mentioned before, you’ll want to go through the property piece by piece and repair things while providing a modern spin in order to catch the eyes of current consumers. If the roof has been neglected, then you’ll probably want to enlist the help of roof repair services in the area. If some of the lights turn on, but flicker, then you’ll be having negotiations regularly with electricians. It may not be mentioned in house flipping statistics, but making sure that a property is in tip-top shape and available for the market is just part of the job description when it comes to home flipping.
While you’re trying to decide whether asphalt shingle roofing or a tin roof is best for your new property, you’ll also want to think about modernizing it with appropriate decorations and colors. In this regard, you’ll probably want to at least tug the ear of an interior designer to see what you could work with your new home and find out what’s both hot and affordable to make your home shine on the market. It may seem silly, but little things like wallpaper and living room paint color can easily flip a consumer from “buyer” to “crier.” Sometimes you can look at house flipping statistics to find out what home features end up selling best, other times these are left out of the official data. It’s up to you to do your own research.
If the house you’ve bought hasn’t been updated in quite a while, you might want to go room by room and either tear out most of the features or replace what’s already there with a modern equivalent. For instance, many old houses contain sub-par glass that does not insulate well and contributes to the home being outdated and having a high energy bill. While you can probably still see through it and use it as a window, it’s probably better, in the long run, to call a contractor to do custom glass and mirror installation in whatever rooms need it. Mirrors, just like glass, eventually fade from usefulness if they’re not taken care of properly. While it may seem like nobody pays attention to these things, consumers will appreciate that such useful parts of a house have been updated and modernized.
In a similar vein to replacing windows, glass, and mirrors, you must take a holistic approach to the house when it comes to everything. Rarely do homeowners take their major appliances with them, especially if they are built into the wall or combined with other appliances. While it’s not an obligation for you to rip out old appliances and replace with new ones, it will add a large price increase to the value of the home and put consumers at ease. In the short term, it also means that if you use the property for rentals or a vacation home, you’ll be able to have access to basic amenities. This same line of reasoning applies equally to bathtubs and faucets just as much as ovens and refrigerators. There are basic things that a home needs to seem “complete,” and they should not be neglected.
Don’t Neglect the Outside
Remember that a home does not just consist of the inside rooms, but is the totality of the lived experience which includes the outdoor spaces, land, and assorted greenery. This may be left off of most house flipping statistics, but that’s no reason to neglect it. From garden shed design to hiring a landscaping company to plant flowers or trim shrubs, the outside of a house is the first thing that a consumer will see and will constitute their first impression. Many a house has been sold because it looks attractive on the outside and is in a desirable area while being a fairly simple on the inside.
House flipping statistics do not often include rural areas, but you can also increase the value of a house by planting viable greenery around it that produces value. This includes things such as fruit trees (easy to care for, high yield), areas for a vegetable garden with perennials (such as tomatoes and beans) and much more. Decorative greenery, especially in urban areas, can be highly attractive because it provides privacy and “natural” style. Many consumers want to live close to everything, but at the same time have their own private oasis. If you are able to provide this, you will be giving them a lot of value.
If All Goes Well, You’ll Be in Business
Before starting this article, you may have looked at the house flipping statistics for your local or national area and said “No way, it’s too difficult for someone like me.” While it’s always good to be apprehensive about taking major financial risks, hopefully, these tips have let you know that many “average” people are able to take residential properties and turn them into profits with less risk than is commonly thought. In fact, by doing some of the work themselves or getting creative with decorating, they are able to create one of a kind properties that fetch a pretty penny. The DIY ethic has its own unique value.
You may now be wondering after reading this article, “is it worth it?” when it comes to shuffling residential property around when trying to make a profit. Unfortunately, only you can answer that question, because only you have access to the intimate knowledge of your needs, wants, and financial/life goals. If dealing with the headaches of contractors and sellers doesn’t interest you in the slightest, remember that you can always hire someone to do your bidding for you as long as you’re willing to share the profits. Remember the LLC idea that we brought up earlier? There are costs and benefits to all business transactions, and you must sit with what works personally for you and your loved ones. Unfortunately, satisfaction is not measured in any house flipping statistics that we are aware of.
While many house flippers report making an average of $25,000 on the various properties that they improve and later sell, the sky really is the limit when it comes to valuing a home. If it’s in a good area and has all the bells and whistles that consumers want, eventually it will fetch a high price. But even the most luxurious home, if it’s on a bad piece of land and in an undesirable area, will not amount to much. These are all factors to consider when you’re deciding to sell fsbo (for sale by owner) and get top dollar amount for the property. Put in the work and effort, and many times you’ll be rewarded. Perhaps you’ll even end up in the positive side of the most recent house flipping statistics.