Flipping Houses: How to Create a Timeline for Success
Flipping houses takes a ton of time, planning, and effort. While we all enjoy watching house-flipping shows, the process isn’t as easy as it seems. There’s plenty of money to be made from fix-and-flip investments, but it’s crucial to take specific steps while finding, financing, and fixing your property. If you want to learn more about flipping houses and how to create a realistic timeline, keep reading.
Contents of This Article:
- What Is House Flipping?
- What You Need to Know Before Flipping Houses
- Creating a Successful Plan for Flipping Houses
- How to Set a Realistic Timeline for Flipping Houses
- Find a Lender for Your Next Investment Property
What Is House Flipping?
Flipping homes is a popular tactic that allows investors to profit significantly from buying, fixing, and selling real estate. Whether you’re an investor, contractor, or Maryland hard money lender, it’s important to understand the steps it takes to flip an investment property.
As the name suggests, house flipping is when an investor buys real estate, fixes it up, and sells it for a profit. Generally, investors find real estate at low prices, make significant repairs and renovations, and resell it to make money.
While flipping houses can be extremely profitable, a few risks should be considered before exploring this investment method. Here’s what you need to know before diving into this investment method.
What You Need to Know Before Flipping Houses
Flipping houses is not for everyone. After all, completing a full fix-and-flip renovation requires a lot of research, time, and work. As such, it’s important to research the pros and cons beforehand to see if you can handle it. If you’re thinking about flipping houses, here are some benefits and disadvantages to keep in mind.
Benefits of Flipping Houses
- You Choose When to Work- Depending on your goals and timeline, you can put as much or as little work as you want into your renovations. Some investors put in as many hours as a full-time job, while others renovate on the side while earning a regular income.
- High ROI- Flipping homes can provide significant returns, depending on where you invest. Some properties and neighborhoods allow for higher returns, so it’s important to do research on profitable areas near you.
- Increase Neighborhood Property Value- Most fix-and-flip properties are old, unkempt, or disheveled properties. As such, fixing them up can increase the value of the property and the neighborhood.
Disadvantages of Flipping Houses
- Financial Risks- Flipping homes is unpredictable, and expenses can pop up at any time. Unfortunately, too many unforeseen expenses can result in financial loss.
- Homes May Need Lots of Work- Fix-and-flip properties need a lot of work, and sometimes, issues may be more significant than you originally thought. As such, if you come across unexpected expenses, it can push back your renovation plans.
- Properties May Not Sell Immediately- Putting time, effort, and money into a property that sits on the market can continue draining your expenses. After all, you must continue paying the mortgage, insurance, and taxes.
Creating a Successful Plan for Flipping Houses
Keeping your returns high and financial risk low is one of the most important steps in creating a house-flipping plan. As such, it’s important to look for real estate that won’t break the bank to begin with. Luckily, there are several steps to help investors create a successful home flip. Here’s a guide for investors looking to start flipping houses today.
- Research Properties
- Set Your Budget
- Find a Loan for the Property
- Hire a Team of Experts
- Create a Renovation Plan
- Finalize Renovations
- Sell the Property
The first step in flipping houses is finding applicable properties. Luckily, there are several resources to help investors find properties to renovate, whether they’re foreclosures or major fixer-uppers. The key is to find a low-priced property, make valuable renovations, and sell it for profit.
Set Your Budget
Once you know what type of property you’re going to buy, it’s important to set a budget–and stick with it. Additionally, you’ll want to account for more than just the property’s purchase price.
For instance, your budget should include the property price, estimated renovations, and other related expenses. Finally, you’ll want to decide how you’ll finance your investment, whether it’s with a traditional bank loan, hard money loan, or private lender.
Find a Loan for the Property
There are several ways to finance real estate. However, you may finance a fix-and-flip investment differently than a long-term rental property. For instance, one handy way to get quick financing for a house flip is with a hard money loan or private lender.
Hard money loans are short-term loans that give you quick financing for some investments. Some people like hard money loans since they have fewer requirements, making them easier to obtain. On the other hand, traditional loans are funded by the bank and based on your creditworthiness.
Create a Renovation Plan
The property you choose for your fix-and-flip likely needs significant improvements or renovations. As such, you’ll want to come up with a plan and timeline to get all of these tasks done. In addition, it’s important to give yourself extra room in your timeline to complete your renovation tasks.
Additionally, you’ll want to identify any renovations or areas you’d like to prioritize while fixing the property. Once you have a list of necessary projects and an estimated budget, you can start hiring a team to help you renovate.
Hire a Team of Experts
Buying and flipping a property takes a lot of hard work and due diligence. As such, if you’re an experienced investor, you know how important it is to have licensed professionals on your team. On the other hand, if this is your first fix-and-flip project, you’ll want to ensure you have the right industry professionals on your team to help you throughout the process.
For instance, you might consider working with a real estate agent to obtain the home. Then, you’ll have to find a private lender or mortgage loan. Finally, you’ll need to hire reputable contractors to perform work at your fix-and-flip property.
Once you feel good about the team you have, you can develop a scope of work and get started on renovations. Generally, you’ll want to work with contractors to plan your renovations, set a timeline, and work out the details.
Sell the Property
Once a licensed inspector looks at your newly renovated property, you can re-list it and sell it. During this stage, you can work with an agent or alone to determine the best marketing practices.
Either way, you’ll want to list your property at a fair price with your investment goals in mind. Then, once you’ve sold the home–congratulations! You’ve completed a fix-and-flip project.
How to Set a Realistic Timeline for Flipping Houses
Flipping houses isn’t as easy as they make it seem on TV. While it’s easy to sit back and watch a crew of professionals finish a lengthy project all within 30 minutes, that’s far from reality. Instead, it can take anywhere from a couple of months to an entire year to complete a large fix-and-flip project.
That said, there are several ways to reduce the amount of time it takes to flip a house. For instance, you don’t want to sit around and wait for your real estate purchase to close. Instead, you can use this time to start immediately by developing a renovation plan.
Additionally, renovations can take longer if you have contractors coming at different times. For instance, you may have to wait for flooring to come in until another renovation is complete. However, if you have all of your contractors come one after another with little downtime, you can keep processes moving.
Finally, if you want to sell your renovated property quickly, you’ll want to price it correctly. Overpriced homes tend to sit on the market. So, if you don’t get a reasonable offer within a month, you may want to drop the price. After all, time is money in the real estate industry.
Find a Lender for Your Next Investment Property
One crucial step in flipping houses is finding the right financing method for you. While some investors use traditional loans to finance properties, some investors look for alternative methods, like hard money loans. That said, if you’re looking for a hard money lender for your next investment, look no further.
Maryland Hard Money Lenders has the knowledge and expertise to help you achieve your goals. Whether you need bridge financing, new construction loans, or a hard money loan, our dedicated professionals can help you find the best solution. Contact Maryland Hard Money Lenders today to learn more about our lending process and other services.