In the past 10 years, house flopping has been on the rise. In 2016, for instance, flipped houses accounted for 6.1 percent of all home sales, up from 5.3 percent in 2015.
Looking to cash in on this trend? Smart move.
However, house flipping can be a double-edged sword. While it has the potential to be a lucrative business, you can also make massive losses and sink into debt.
So, what’s the secret?
Keep reading this article to learn how to buy, flip and sell abandoned homes – and make tidy profits while at it.
Understand How House Flipping Works
Buy, sell at a higher price, and cash in your profits. Straight forward stuff, right?
Well, kind of, but there are other details you need to know.
When you buy a house to flip, you have two options: Make repairs and upgrades to boost its value then sell or hold on to it for a couple of months and sell it as is at a profit.
You can choose to stick to one of these strategies or adopt a flexible approach. The latter involves assessing abandoned properties on a case by case basis.
Know Where to Find Abandoned Homes
Have you ever seen an “abandoned house for sale” sign when driving around? Neither have we.
Yet, to make a business out of flipping abandoned homes you must first find these homes. The question is where do you find them?
For starters, you must understand that an abandoned home doesn’t necessarily mean a vacant, aging house in the middle of nowhere. It could be a normal-looking home that’s facing imminent foreclosure or one which the owner, for whatever reason, wants to offload urgently.
Real estate agents usually have information about abandoned properties in their territories, so build a strong network.
Another way is to keep tabs on real estate classifieds and look for properties with descriptions such as “must sell,” “urgent sale,” or “below market value.”
Get Your Financing Ready
House flipping is a cash-intensive business. As such, it’s vital to have your finances in order before entering the market.
Although you can buy properties through credit financing, it’s advisable to use your own cash. Here is why.
If you take out a loan and the property takes longer than expected to sell, you’ll still be under obligation to repay your lender. To raise the money, you could be forced into lowering the price so the property can sell quickly. But had you invested your own money, you’d have the luxury to wait for a buyer who is willing to meet your price.
Additionally, relying on loans can cause you to lose out on a property because approval takes time. You need to be ready to snap up homes as soon as they become available; otherwise, other investors will beat you to it.
Prepare the Property for Sale
After acquiring an abandoned home, you should prepare it for the market.
This could mean making necessary repairs and sprucing it up. Even if the property is structurally perfect and ready to go, you might still need to take care of things like furniture removal and garbage disposal.
When flipping a property, take care not to spend a lot of money on repairs and remodels. It’s also important to let experienced local real estate agent help you price the properties accordingly.
Turning Abandoned Homes into Abundant Profits
Abandoned homes might look lifeless, but they aren’t valueless.
As a real estate investor, you can make money flipping such homes. What’s more, we have given you the information you need to become a successful house flipper. Use it to your advantage.
All the best and feel free to explore our site for more real estate insights.