Everything You Need to Know About Flipping a House in Houston
Flipping houses can be very profitable and a great way to get you closer to financial freedom. However, you must know the tricks of the trade first. Let's first understand what it is. House flipping is a process by which investors purchase low-value properties, renovate them, and resell them for a profit. In the 21st century, this is one of the most profitable businesses. It requires a succession of planning and genuine creativity.
Flipping houses in Houston is not easy but achievable if you put the work into learning how to do it right. You need to know how to purchase and sell it at the proper time without losing any capital. At the same time, you need the services of a company like Bang It Services Inc., which can help you renovate the houses at a reasonable price before selling them for a profit. In this article, we have shared information regarding flipping houses that might help you get some deep knowledge about the topic.
What are the Pros & Cons of flipping a house in Houston?
To begin with, let's first have a look at the pros and cons:
One of the best things is that you will have an excellent opportunity to earn lump sum revenue by flipping houses. Even though it won't take long, you may have to allot three to six months for this, depending on the size of the renovation.
As a real estate investor, you will be your own boss and control your day-to-day activities. Flipping is a business you can choose to work full or part-time. If you have always wanted to be an entrepreneur, real estate is a great way to go with so much available information to help you be successful.
You can build relationships in the industry that will allow you to take advantage of more long-term investments.
To get started, you can use OPM or other people’s money. Finding people and institutions willing to invest in your project is easy, unlike other business opportunities. Real estate provides an asset to leverage to raise funds, and as long as the numbers make sense, someone is willing to help you close the deal.
Like any form of investing, there is always a risk of losing money. If you cannot sell the property during your planned holding phase, the interest payments can eat away at potential profits if you have taken a loan. Also, if the market drops or buyers lose interest in the property, the flippers will be at a significant loss.
You will lose the opportunity cost of selling the property instead of using it as a rental. You can generate monthly passive income when you hold on to a property for a long time with a renter occupying the home.
As a flipper, you may be subject to capital gains taxes from selling the property. Flipping does not have as many tax deductions as other long-term real estate investment techniques. The more you pay in taxes, the fewer profits you have left over from each deal you do.
How to flip a house like an expert?
Before making the final judgment, you need to know the steps involved in flipping a house. Following are the steps:
Select The Property: The first thing in this business is to pick the perfect property for flipping. It's always better to select old properties. As you can get those houses at a cheaper rate. After repairing those houses, you can sell them quickly at a much higher price than you originally paid. Make a deal with the lower-rated houses within your budget.
Utilize the 70% Rule: The main target of the 70% rule is to grab as much profit as possible. Your achieved revenue for the houses should be more than your paid amount. Your target should always be to profit at least 30% from flipping.
Your first duty is to compare the price rate of selling houses within Houston.
Next, survey the value of similar properties and surroundings.
After that, calculate your repair expenditure and consider the price after repair.
Don't forget to focus on the extra charges like – property taxes, holding & closing charges, payments of loans, insurances, etc.
The 70 percent rule is calculated: ARV x 0.70 - repair expenses = maximum offer price. If you stick to this rule, you will reap the benefits. Maintain your budget and accomplish the task inside the loan's timeline.
Search for a Lender: Search for a loan specialist with experience working with real estate investors. The loan for properties you plan to live in, differs from those used for properties that will be used for investment purposes. You want to work with someone with experience closing these types of loans.
Remodel to Enhance Property Value without Loss: First, prepare an estimated budget. Evaluate how much the house will be worth. Then make a budget of how much money can be invested in repairing the home. You should renovate the house as per the value of similar houses in that neighborhood.
Your main motto should be profit only and not creating your dream home. So don't exceed the cost of renovation needlessly. Here, Bang It Services Inc. can help you to a great extent. We offer services in roofing, window, door, painting rooms, flooring, remodeling of kitchens, washrooms, plastering, and any other repair your investment property might need. So, you can simply leave the renovating job to us and focus on getting the house sold.
Sell at a Higher Price: This is the last step, and usually the most important one to think about. Weigh all your profit margins and risks before selling the house. Now deal with the right customer at a profitable rate. Never confirm the agreement if you feel unsecured with that buyer regarding the price.
We hope this article on flipping houses in Houston was helpful for you. By following the steps mentioned earlier, you can make the right decisions and save your money. For any further queries, feel free to contact us.
The experts at Bang It Services can help with all your renovation needs. Call (832) 767-1581 to get a free estimate.