The reality of flipping house is not as good as its concept. There are so much involved in flipping real estate. You could end up being saddled with a house you really do not want to own without the proper knowledge on how the process works. Or you could end up taking a big loss on the sale of your property.
Here are tips to help increase your profit margin when flipping houses:
1. Buy low and sell high. Create a free brochure. You can put title like “3 ways to avoid foreclosure and get cash NOW for your equity” and distribute the brochure in the foreclosure process and homeowners who are currently 90 to 120 days behind on their mortgage payments. You can obtain foreclosure information from your local court house or you can visit Experian.com, Equifax.com, or TransUnion.com for homeowners who are currently behind on their mortgage payments.
2. Contact divorce attorneys in your area and offer your home buying service as a resource to help clients liquidate their homes. Before you get into house flipping there are five main points you must take into consideration:
a. Acquisition Costs: Plan on writing out checks to your attorney, to the title company, government agencies and other closing costs. Look into getting an option arm mortgage loan with a 1% minimum payment.
b. Management Costs: shell out cash for property taxes, utilities, lawn maintenance, homeowners insurance, mortgage payments, and more.
c. Home Improvement Costs: Whatever repairs and improvements you make to increase the value of the house.
d. Selling Costs: how you want to sell your house. Privately or through realtor? Real estate commissions running as high as 6% can eat up your profits very quickly.
e. Capital Gains: A “good problem” to have is to make so much money off of flipping houses will worry you to pay capital gains taxes.
People do make tidy profits by flipping houses, while others lose out. Before buying a house that you plan on flipping later, do your homework before jumping in to make certain that you understand everything.