In this post am going to be sharing with you House Flipping Requirements. This will help you on what you need to know before you think about flipping a house as a business.
You don’t just flip a house and think about making money because you felt it’s going to sell.
There are a lot of reasons people will sell their house at deep discounts or distress sale. These reasons could include (and are certainly not limited to):
- House needs a lot of repairs the owner cannot afford to make
- Person inherits a house and would rather have cash
- Landlord is sick and tired of dealing with their rental property
- Owner needs to relocate and sell their house fast
- Divorce situations
- Owner just doesn’t want the hassle of selling their house the conventional way
- Family Issue
- The house foundation isn’t solid and good.
There must be a proper research before buying and thinking about flipping the house but this requirement will help you half way. So let get started.
Plenty of Cash is Required for House Flipping
One of the first house flipping requirements if you want to flip a house, is cash. New investors get into financial trouble when they buy a home without a sizable down payment or cash, you will need to work on home improvements and renovations. If the house doesn’t sell quickly, or if renovations cost more than expected, suddenly the investor begins to think otherwise.
Don’t be that investor. If you want to flip successfully, you need plenty of cash on hand. Most lenders require an interest and lenders are where you’ll get the best rate.
Not every house makes a good flip. Just because a home is selling for a rock-bottom price doesn’t mean you can put money in it and automatically make a fortune. Successful flippers are very discerning about the homes they choose to invest in. Here’s what should you look for in a potential house flip.
Great location is part of House Flipping Requirements
Expert house flippers can’t stress this enough. Find a home in a desirable neighborhood like Magodo, Omole, Ajah, Lekki, Phase 1, 2 or a nice developing neighborhood around you. You can improve a house all you want, but it’s next to impossible to improve the personality and safety of a neighborhood on your own.
Start by researching your area and neighborhoods. Look for areas with rising real estate sales, employment growth, and other indications the town is thriving. Avoid neighborhoods with a high number of homes for sale; this could be a sign of a depressed local economy or a sign that neighbors are leaving due to one issue or there’s no development happening in the area.
Next, research the safety, quietness, and settlers of each neighborhood you’re considering.
Sound Condition and the Right Renovations
This House Flipping requirement requires that If you’ve ever done a home renovation project, you know some nasty surprises can be lurking just below the surface. And nasty surprises like black mold or a cracked foundation can ruin you financially.
Look for structurally sound homes, especially if you’re considering buying an older home. You may not have the opportunity to have a home inspected, especially if you buy it at a real estate auction. So you need to learn what to look for or bring someone knowledgeable about building, electric, and plumbing to look at the home with you and determine if it’s a good buy.
Focus on homes that only need some quick updates to resell. Refinishing kitchen cabinets, adding new hardware, fixing up the yard, and updating paint and carpeting are all relatively inexpensive projects that can transform a home.
What should you avoid? A house that has mold, needs a roof replacement, or needs rewiring will require some serious time and cash to update and sell. Make sure you know which updates and repairs you can afford to make, which repairs you can’t afford, and which home improvements will increase the selling price of the house. Bear in mind that some home improvement projects can decrease resale value.
When you estimate the cost of any job, experts advise adding 20% to the final total as it will always cost more than you think it will.
This is a very important aspect in house flipping requirements. Make sure the price of the home is below its value on the local market. Try to buy the worst house in a great neighborhood, versus the best house in a lousy neighborhood. The worst house in a great neighborhood has nowhere to go but up in value, due to the value of the other homes in the area.
Although you can search the web and see millions of foreclosed homes for sale, never buy a home without seeing it in person. This is the biggest mistake new flippers make. Keep in mind that an online photo gallery only tells part of the story. Out-of-date photos, awful neighborhoods, and black mold are just a few of the horror stories of foreclosed homes found online. Always investigate a property yourself before you decide to buy.
When you buy a home to flip, it’s important not to over-value the home by investing too much in renovation. You want to improve it just enough to make a healthy profit and keep it on par with what’s selling in the neighborhood. If you put too much into the home, you won’t make your money back.
When considering a home to flip, these house flipping requirements will be of help to you and also don’t forget to factor the cost of building permits. These can cost anywhere from a few hundred up to several thousand Naira, depending on the type of work involved and the city you’re in. Not accounting for permit costs is a rookie mistake that can quickly ruin your renovation budget.