Apply These Rules When Flipping Houses

Flipping a house is a huge investment. It requires not just money, but also your time, energy, and expertise. Without these things, it would be impossible for a flipping project to be successful. To ensure the success of your flipping project, there are flipping rules you should follow. These are the following:

Always apply the 70% rule

When it comes to flipping a house, the first thing you should consider is whether the house you are going to flip is a good deal or not. You need to figure out beforehand if the property will help you make a decent profit. This is where the 70% rule takes place. What really is the 70% rule? You need to do a simple computation. All you need to do is to add the price of the property to the cost of rehab. You are going to make a good deal if the sum is less than 70% of the after repair value of the property.

Know all the associated risk

House flipping is a risky business. If you are in the business of house flipping, you need to know, understand, and embrace the risks that come along. You can somehow minimize the risk by deliberately making your choices. Come up with a tested and proven effective house flipping strategy to minimize the risk and maximize your profit. If you take the time to know the ins and outs of the house flipping business, you will be able to know the secrets to finding great deals and at the same time be able to minimize the risks. Aside from choosing the best property, you need to create an effective exit strategy. By knowing the associated risk as well as having a solid plan of action, you will be able to keep your house flipping business profitable and be on top of your game at all times.

Focus on high-quality rehab

A lot of investors focus on the amount of money they make that they ended up with a substandard flipping project. If you take for granted the value of your rehab, then you will not be able to ask for market value on the property you sell. Keep in mind that your buyers are looking for a quality house. If you don’t give them high-quality rehab, then they will not make a good offer on your flip. On the other hand, you don’t want to over rehab the property because if you do so, you go over your budget, which will then increase the asking price. However, a high-quality rehab can significantly bring up the market value of the property. If you are new in the house flipping business, you will surely have a hard time computing your rehab cost. You will be prone to making mistakes, but as you go along you will be able to master the ins and outs of the house flipping business.

Before you venture in house flipping business, you have to make sure that you come well-prepared. There is no shortcut to house flipping success. You need to devote your time learning the ins and outs of house flipping. Invest in your real estate education. Read books, participate in various real estate events, and find a mentor who can help and guide you through the decisions you make. The struggle is real if you are just starting in the business, but you will eventually reap the fruit of your labor.

 

Professional House Flipping Tips

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Mistakes are great teachers. They can help you grow both in the professional and personal level. However, in the real estate business, a mistake could cost you a lot. It is easier to learn from other people’s mistakes. If you are planning to flip a house, then you have to take these house flipping tips and advice. They came from the best people in the real estate arena.

The Future of the Real Estate Industry

Real estate investors do not only look for profit potential, but also consider the risk that comes with the property. The real estate market trend should be considered too because it can directly affect the investment strategies used by investors. Let us take a look at where the future of real estate industry is heading on this year.

Millennial home buyers are the primary market

Real estate is primarily dependent on the supply and demand. This year, the majority of the real estate market is millennial home buyers. These are people born from 1980 to 1999. This year, more and more millennials are looking for a place to call their own, which also means that the demand for homes will increase significantly. Millennial buyers are here to stay, not only this year but for the years to come. They will remain a big chunk of the population.

Increase mortgage rates

Mortgage interest rate is on the high side and will continue to increase for the years to come. However, the increase in mortgage interest rate is slow and not in any significant amount. It will require a consistent economic growth and inflationary pressures to have a significant increase in interest rate. The interest rate for a 30-year fixed mortgage is in the 4% to 5%. The increase in the interest rate is not likely significant when compared to the overall home buying market. It could somehow affect the low end of the market, especially the first time homebuyers.

Easy credit access

The deregulation of the financial market has led banks to become lenient for credit borrowers. Easy credit access is beneficial not only to home buyers but also for real estate investors. The availability of credit along with rising interest rate and increased demand for new homes could significantly put inflationary pressures on home prices.

Continuous home price appreciation

There is a continuous home appreciation, not only this year but for the years to come. There will be a 3.9% growth year after year, as per the Realtor.com 2017 Housing Forecast. Some regions will have a higher rate such as in Denver, Portland, and Seattle. The west part of the United States will have a stronger appreciation compared to other parts of America. Home price appreciation is caused by employment growth. Thanks to the increasing demand for skilled employees.

Are there any downsides?

There is no such thing as a risk-free investment. This principle does not only apply to the real estate, but in all other types of business. As a smart real estate investor, you need to be prepared for the downside risks. Factors like political uncertainty, terrorism, and conflict of interest in the country and international trade could significantly impact the economy. The rise in the value of the dollar can affect the export industry, which also has an indirect effect on the real estate industry.

Overall, the future of the real estate industry is going to be great this year and for the years to come. Prices will continue to rise but at a slow pace. Mortgage rage will be volatile, but the credit availability will significantly improve. The housing supply will improve significantly but still remains short because more millennials will be looking for rental properties and most of them are first-time home buyers too. As the demand continues to increase, the competition among real estate investors will grow fiercer. Last year, typical properties stayed on the market for about two months and predicted to be even faster this year. Politics has something to do with the future of the real estate industry. President Trump’s policy priorities can significantly affect the housing market. The president pledges to cut taxes, spend more on infrastructure, and crack down on immigration. Any move in these three areas can somehow impact the real estate market.

 

House Flipping – Remains to be a Viable Investment Option this 2017

Real estate is a highly profitable industry and the good news is there are many different ways to invest and profit from it. Of all real estate investing strategy, house flipping remains to be on top of the list. What awaits for house flippers this 2017? Is house flipping still a profitable investment strategy? Are the conditions of the real estate market favorable for flippers?

Following the uncertainty of the presidential election last year, a lot of real estate investors want to find out whether 2017 is a great year for them. The good news is things are turning up again. The overall forecast is that there will be a modest growth in home values. The demand for real estate property will be significantly high, including the demand for rental property. On the other hand, there will also be affordability challenges and higher mortgage interest mortgage. There are a few downfalls, but they can be remedied through the easier lending scheme and employment growth. There are many opportunities waiting for real estate investors. In various places in America, you can find thousands of vacant homes. You can find a lot of house flipping worthy properties from foreclosures and bank owned properties and avail such properties is pretty easy because the lenders speed up the process.

Ideal market conditions for house flipping

  • The property should be ripe for upgrading so that you can sell it at a much higher price.
  • The property should be purchased at a discount price so that you will have more room for repair, sell the property at a market rate, and be able to make a huge profit.

The average profit from flipping houses is over $60,000. As the number of distressed properties continues to increase and new home construction is pushing real estate prices to new highs, 2017 is expected to be beneficial to all types of house flippers.

Other profitable ways to make money in the real estate arena

House flipping is not the only way to make money in the real estate business. There are many other ways such as crowd funding and real estate investment trust. However, these methods lack security and highly volatile. They offer skinnier yield considering that the mortgage interest rate is on the high side. Should you wish to invest in rental properties, the profit potential is also high. It is perfect for people who want to have a steady cash flow and build long term wealth. However, you need to devote your time finding great rental property deals. It is quite difficult to find rental properties, but once you find one, you will surely enjoy a continuous flow of money. Just keep in mind that rental properties do not deliver big lump sum of cash in short term.

If you don’t like doing house flip or manage a rental property, then you could perhaps do wholesaling. It is flipping in some sort, but without the fixing part. If you are the type of person who is not interested in improving the property, then a wholesaling method can work for you. Wholesaling is a viable investment option this year, but the profit you make is not as huge as house flipping. If you want to maximize your profit potential, then house flipping is still an ideal investment strategy for 2017. There are tons of house flipping worthy properties out there and it is up to you on how you can maximize your profit from flipping houses. It is always a smart decision to ask help from real estate experts.