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Retirement is the goal many people spend their careers working toward and dreaming of. However, some individuals need something more than relaxing to occupy their time and make them feel fulfilled even after they no longer need to work. House flipping is an option that allows you to make your own schedule, exercise your creative chops and make a profit. Read on for some tips from S2 Equities.
Formalize Your Enterprise as a Business
While you can flip a house as an individual, doing so eliminates the possibility of business tax deductions and leaves you without adequate protection from the loss of personal assets in the case of a lawsuit. An official business structure offers you options. Forming a limited liability company comes with advantages such as flexibility, less paperwork, tax benefits, and personal liability protection.
You don’t need to spend a lot of money on a lawyer either. Online formation services are affordable, easy to use, and capable of taking care of the tedious legwork, so you don’t have to. No longer do you have to wonder about how to start an LLC in Texas when a formation service can see to the details for you. They’ll help you file with the Secretary of State, create an operating agreement, and register for an Employee Identification Number (EIN).
Locate the Best Opportunities
The ideal house for flipping possesses certain traits that make it appealing. For instance, location is a key element. Buyers search for the following characteristics:
- A nice neighborhood
- Proximity to essentials like grocery stores, hospitals, and schools
- Distance from loud or annoying sites such as train tracks and rendering plants
- Low crime rates
Factor in the city or town the house is located in as well. Job opportunities and a stable or growing economy attract people.
History is also important; people usually don’t want to move into a house purported to be haunted, for instance. There are many methods to research a house’s history, including asking your realtor or locals about it or using online tools. Check the structure of the house. If there is excessive structural damage (rotten roof or wrecked plumbing), it could cost more to fix than it’s worth. Similarly, it’s best to avoid houses that need repairs to major systems such as HVAC, electrical, or plumbing. Issues with those systems can be very expensive to resolve. Search for positive physical qualities such as a good layout or a spacious kitchen.
Renovate for the Highest Return
Enhancing curb appeal is one way to hook potential sellers. As a bonus, it can be done without spending lots of money. Touch up the inside and outside with a fresh coat of paint. Pick the color carefully, as research shows it can have a big impact, according to Echo. Neutral colors are often a good bet, but whatever scheme you choose, remember to be consistent.
Replace broken or outdated doors, windows, and faucets with sturdier ones. Redo the bathrooms with modern touches. Other projects that have good returns on investment include garage door replacements and minor kitchen remodeling, such as adding a range hood to vent grease, smoke, and odors from your kitchen to keep the air cleaner in the home.
You can obtain loans for your project from private lenders like banks and credit unions. Other sources of funding include home equity loans, crowdfunding, and personal loans. Alternatively, you can try seller financing or look for investors. CNBC suggests making sure to check your credit before trying to secure funds, as a bad credit score may prevent you from obtaining any.
Sell To Make a Profit
Once you’ve made over a house into a sparkling attraction, contact a local real estate agent after careful vetting through online research. Create a timeline with steps you need to take, such as preparing the home for viewings and having a home inspection performed, so you don’t forget anything or become overwhelmed. Take nice photos of the house and have someone give in-person and virtual viewings. Make sure to set a reasonable price and review offers closely. Account for taxes and closing costs in any plan you make.
House flipping done right is profitable, but it can also be risky. These tips – including forming your business structure, finding optimal opportunities, renovating with ROI in mind, and securing financing – will lay a foundation in the basics to help you get a good start.