House flipping has become an increasingly popular way to make money. If you’re a senior looking to make some extra money by investing in real estate and renovating homes, or if you’re interested in getting into house flipping full-time, this guide from Northern Pass Properties can help you get started with everything from finding the right house to sell to coming up with ideas for how to fix it up and make it sell quickly.
The First Thing You Need Is Capital
Most homeowners who flip their houses have significant cash on hand, ready to put into their projects. It’s difficult (if not impossible) to purchase a house and renovate it if you don’t have enough money set aside in your business account. You can sell off personal belongings or take out a loan from a bank — whatever you need to do, obtain enough money to get started flipping houses. Also, It's a good idea to put aside 20% more than your expected costs, especially to help cover potential major repairs involving electrical systems, HVAC, foundation work, or mold and asbestos.
How Do You Choose Which Property to Flip?
The first step in any house flipping project is choosing a property to buy. Many factors go into your decision: the condition of your chosen home and the surrounding neighborhood, housing market conditions, and — most importantly — how much money you can put down. While you can make some profits flipping houses with little or no money down, it's much more difficult without some cash in hand.
How Can You Boost Your Property Value?
If you’re considering flipping a house, consider adding some amenities. For example, one way to boost your home’s value is to add upgrades, such as flooring or a new kitchen. When you remodel your kitchen, it’s a good idea to replace the appliances and install a new range hood, and be sure to hire a competent plumber.
Trying to do it yourself may seem like a good idea when you’re trying to save money, but when it comes to plumbing, you can end up creating more problems and spending more money if you don’t know what you’re doing. Plumbers typically charge $45–$200 per hour. Read reviews online and always hire a licensed, insured professional.
Additions can increase resale value by 25% or more. But before spending money on these improvements, first determine what buyers are looking for in a home. Some options include:
- Adding a bedroom (an added bedroom can add up to $50,000 in value)
- Updating your bathroom
- Adding an air conditioning unit
- Putting in a basement conversion
- Installing new flooring
- Painting everything
One specific upgrade you’ll likely want to consider is to the kitchen. Be mindful of the timing of your project; you don’t want the project to take so long that it pushes you out of the selling season. Also be sure to replace what needs replacing, instead of trying to paper over it.
An LLC, or a limited liability company, is a legal entity that protects its owners from financial loss. It does so by separating ownership from responsibility. If a business’s debts are too high and it goes under, an LLC in Texas allows its owners (called members) to dissolve and divide its assets among themselves without fear of personal repercussions. In short: If you’re interested in starting a new company, you need an LLC. Using a formation service can streamline the process, and it's more affordable than going to a lawyer.
You also want to ensure that your business pays your contractors accurately and timely. You’ll find there are many payroll software options to consider. Make sure that the one you choose provides ease of use and effective integration with your payroll processor.
Building a Future
Be sure you're ready before starting down this path. It requires persistence, good planning skills, self-control, and good financial management skills. Most important — start small and build from there.
To maximize your rental property investment in El Paso, contact Northern Pass Properties today!