There are two strategies for flipping houses. Investors can buy a property, fix it up and sell it for a significant profit. Then there’s the other option: skip fixing things up entirely and rush to resell. This second approach is called “flipping,” but for most people who look at houses to buy and sell them quickly, trying to flip often leads to disaster.
It sounds simple enough: you find a fixer-upper listing, buy it at a lower price, and then sell it later at a higher price. There’s money in that idea, but there are also risks. For most investors who try to flip homes, the process is so risky and challenging that they often lose out on a lot of profit.
Buying and reselling a house
You might be thinking about buying a vacant home, fixing it up, and reselling it quickly. You’ll need to make repairs on the property before it’s ready to sell. Because most people want to buy a new house as quickly as possible, they’re prepared to pay more for an empty property than one that is not yet repaired.
Plus, there are plenty of culmination around buying and reselling a vacant home that people often forget about. If you don’t know what you’re doing, all those issues can lead to disaster for your business.
Are you going to be able to handle the legal and financial parts of buying and reselling a house? That starts with knowing how loans work on fixer-uppers so that you can get a great deal on the house before you fix it up. Then, you’ll need to find out if there are any liens against the property so that you don’t end up with another person’s financial problems when you go to resell it.
Since most investors prefer to buy vacant homes, they also need to know how to buy them without ever seeing them. Plenty of issues with vacant properties require you to be very careful before buying one and reselling it quickly. Distressed or foreclosed properties can become wholesale real estate properties, but you have to decide whether to fix them or sell them immediately.
Fixer-uppers May Cost More Than the Average Home, But They’re Still Good Buys
If you are fixing up your home before reselling, you need to know the difference between cosmetic and structural work. Most people who try fixer-uppers fall into the trap of thinking that cosmetic changes are acceptable, but then they end up overspending on structural upgrades that aren’t necessary. The best way to avoid that problem is to know your market. That means you should look up the average cost of structural changes in different areas so that you know what’s normal for the place where your home is located.
When it comes to cosmetic fixes on homes, there are plenty of things you can do to save money, especially if you want to sell fast. Like a custom kitchen island or new bathroom cabinets, some upgrades will set you back a lot of money. But you don’t need those kinds of expensive upgrades to make your home stand out from the rest.
You can do plenty of cheaper renovations that will fix up your house and increase its value, including:
- Replacing carpeting with tile, wood, or laminate flooring
- Replacing old windows with modern versions
- Painting old walls a bright color that contrasts with the trim
- Putting in fresh paint on walls and ceilings. Any color will do as long as it looks clean and new.
You’ll indeed need to spend more time finding homes before you buy them. But there are plenty of great deals to be seen if you’re willing to look, and your time is money.
If you manage all the legal work, handle the financial arrangements, and take care of the renovations yourself (or at least hire a contractor to do it). Then you can certainly make money on fixer-uppers. The key is to be sure that you know the difference between cosmetic and structural work, know what projects will increase your home’s value in the neighborhood, and find out if any legal issues might affect you when you resell.
Advice on flipping houses
When you’re buying a vacant home to fix up and resell, three significant challenges could make it hard for you to sell the house again. Before you commit to purchasing a property, you must be sure to address all of these issues.
- Most people with vacant properties have liens on them that they can’t pay. You don’t want to inherit another person’s financial problems when you buy a home.
- Most people who need to sell a vacant house fast aren’t going to be able to do the repairs themselves, so you’ll need to make sure you can handle those tasks, too.
- Because most purchasers desire a fixer-upper to flip, you’ll need to know how to acquire a property without ever seeing it, which implies you’ll almost certainly need some expertise working with sites like Zillow, Trulia, and Redfin. Also, avoid the typical blunder of paying too much because you fell in love with it.
If you’re able to find a great deal on a vacant house and you have the time, talent, and money to renovate it yourself, then you can certainly make a profit reselling a fixer-upper. But if any of those problems sound too challenging for your skills or needs, you might be better off focusing on purchasing homes that you can move into and then rent out.
You can make a profit from buying and selling houses, but you still have to be wary of hidden expenses and delays; otherwise, you’d end up losing a lot of money.
