Flipping houses is a real estate term for taking a property, often distressed or abandoned, fixing it up, and selling it. While it may look extremely easy on TV–everything looks easy on TV–it actually requires a good deal of strategic shrewdness and sweat equity (otherwise known as hard work). But, if done right, you can turn a good profit on Morgan Hill homes for sale.
Look for the House Bargains
Location, location, location. This is your first and biggest consideration. Here’s where a good knowledge of your city will help you. Research neighborhoods, schools, crime rates, proximity to shopping and entertainment, and future development plans (public, commercial, and residential).
Foreclosures are the most common, but are a highly competitive market since you’re not the only buyer looking for a bargain. Watch the public records of foreclosures. You may be able to jump in and offer a short sale to an underwater homeowner. This is where you offer a discounted price for the home. It can be a win-win situation for both you and the homeowner, since it will help them avoid the devastation of foreclosure and help you gain a bargain. Homes for sale by auction or homes owned by the bank are also great bargain-hunting opportunities.
Fixer-uppers are another option. Here’s where the principle of progression applies: a little, old house surrounded by larger, more expensive homes increases the value of the little, old house. Buying the worst house in a great neighborhood can actually be a good investment. Some buyers will jump at the chance to live in a nicer area even if it means living in the smallest, humblest house in the neighborhood.
You may want to hire an inspector to help you evaluate the repairs needed. If nothing else, another pair of eyes can spot things you may have missed.
Sit down with your calculator. House flipping works the best for those who have some construction or handyman skills. If you’re able to do some of the repairs yourself, calculate your time as part of the cost. If you’ll need to hire contractors, estimate the cost to do so. Don’t forget the cost of labor codes. Then add 20% to your estimate since repairs usually end up costing more than you expected. If you need to be selective on repairs, focus on the kitchen. There are plenty of buyers out there who’ve chosen a house based on the kitchen. Make sure mama’s gonna be happy. Add the mortgage expense, insurance, and taxes that you’ll need to pay while you’re fixing the house and trying to sell it. Here again, add 20% to the amount of time you think that will take. Now, you have an estimate of the costs involved in flipping the house and you’re ready to make an offer.
Flipping houses is not for the faint of heart. Developing the ability to land great house bargains and make accurate estimates of expenses will help you turn the best ROI on Morgan Hill homes for sale.