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House Flipping: A Beginner’s Guide For Success

Flipping a house means buying a home with the intention of fixing it up and selling it within six months for a profit. Americans flipped 26,947 single-family homes in Q3 2014, accounting for 4 percent of all home sales in that period, according to real estate data firm Realtytrac. The average gross return for investors was $75,990 per home, up 2 percent from Q2.

Flipping houses can be profitable, particularly when home values are rising and interest rates remain at historically low levels. The Federal Housing Administration stopped enforcing anti-flipping regulations—which prohibited insuring any home for less than 90 days—in 2010. If you’re looking to get into the home flipping business, follow these four guidelines for the best chance of success.

Build a Bankroll

Everything in life requires money, and house flipping is no exception. You could take out loans to buy properties, but then you are just creating debt in the hopes of making money. A smart house flipper who wants to profit immediately and often will use his or her own money.

The best way to build a bankroll is by saving over time. Consider selling your own home if the proceeds will pay off the mortgage and leave you with enough to get started. Those currently receiving regular payments from a structured settlement or annuity can consider selling their future payments to a company like J.G. Wentworth for a lump sum of cash now. Make sacrifices like selling off an extra vehicle, disconnecting cable television and giving up the $5 lattes in the morning to pad your bankroll further.

Buy at Discount

You’ll make the most money if you buy a house for less than its actual value at the time of purchase. The best way to do this is by seeking out motivated sellers. These are people who need to sell quickly to relocate for a job or simply need to make fast money.

Use your social media networks to generate referrals. Inform friends and followers that you are looking to buy properties. Knocking on doors in prime neighborhoods can also generate leads—target homes with “for sale” signs and distressed properties that appear neglected.

Location, Location

The total value of all homes in the U.S. was $27.5 trillion at the end of 2014, according to data compiled by Zillow. That represents a 6.7 percent increase from 2013 and the third consecutive year of positive gains. But certain markets are doing even better.

Miami, Atlanta, Houston, Orlando and Las Vegas experienced the largest gains for 2014, with each up at least 11.5 percent on the year. These markets offer the largest margin for error for those flipping homes, particularly with a major housing market correctionbeing predicted by several economists for 2015. This is mostly due to the Federal Reserve ceasing its quantitative easing program and no longer artificially inflating the markets.

A good rule of thumb when buying in areas that experienced low or negative year-over-year home value change (i.e., Indianapolis and Phoenix) is to only purchase homes at 10 percent or more below current market value.

DIY Where Possible

You’ll likely need to hire plumbers, electricians and other contractors to tackle major home improvements. But the more you do yourself, the higher your profits will be. You and a few friends can install new sinks and countertops and even shingle a roof. Youtube has hundreds of instructional videos that cover everything from replacing water heaters to installing shower faucets. Creative landscaping can increase the value of a property by 13 percent, according to a study by Virginia Tech University. The DIY Network has several ideas for easy landscaping projects that anybody with a little ambition can complete.

House flipping is a cyclical endeavor that is only profitable when economic conditions are positive. Now is a great time to get started.

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About National Realty Group

National Realty Group was founded in October 1991 by Jeff Maas. It started as a two man office but soon grew to a medium sized office. One of the original agents formed a new home development company soon after. Steven Walker Homes is now a large national home builder. Southfork Mortgage Company Corp. was founded in April 1990 by the owner of a large home builder. Jeff Maas stepped in as its Broker in September 1993. With the help of Jeff Evens, Jeff Maas was able to expand the company. In July 1994, the owner of Southfork retired and Jeff Maas and Jeff Evens purchased the company. They continued the growth and soon built it into a multi-million dollar corporation. National Realty Group remained separate until Jeff Maas sold it to Southfork Mortgage in 1996. This allowed the owners to expand National Realty Group while allowing its agents to provide mortgage services to their clients. In 1996, a branch office of Southfork and NRG was opened in San Bernardino. It was later moved to Redlands in the most well-known office in the city. In 1998, they opened an office in Temecula in the Temecula Valley Bank office. The offices were expanded and closed 45 million in real estate and loan transactions in 1998. In 1999, Jeff Maas purchased the company from Jeff Evens becoming sole owner and broker. Shortly after the name was changed to National One Mortgage Corp. The company outgrew its 3000 square foot office in Riversideand moved to a building of approximately 6000 square feet. The growth continued at a spectacular rate. The company grew to over 40 agents within one year. The expansion continued with the addition of 2800 square feet and later adding more space for a combined total of nearly 13,000 square feet. At our peak we had over 125 agents and 12 employees in the Riverside office alone. During the summer of 2003, we opened an office in Temecula at the corner of Rancho California and Margarita. This office was soon bursting at the seams with 42 agents and 3 full time employees. Due to the increased demand for our unique programs, by the public and real estate agents, offices were opened in Corona and Ontario in early 2005. The year saw more amazing growth with offices opening in Moreno Valley, Hemet, Las Vegas and Norco. Rancho Cucamonga and Phoenix opened the first part of 2006. A Murrieta office opened summer of 2007. The economy has not been kind to many real estate and mortgage companies. We have remained strong and successful. Our business model of a One-Stop Shop provides the exact service and convenience the Home-Buying public desires and needs.

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