Dalena Properties
Jan 20 2017

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Tags: house flipping home repairs  home maintenance  real estate investments 

What Makes a Good Real Estate Investment
How To Spot A Good Real Estate Investment

If you've ever considered the option of flipping houses in order to make a quick profit, you need to consider all the facts before you make your decision. Sure, you can make a very handsome profit if you know what you're doing, have studied the local market and go about it the right way - but house flipping can be an extremely high-risk adventure and without doing the proper research, it could end up costing you more time, money and headaches than you initially thought it would. Is it worth the effort and investment?

What is House Flipping?
House Flipping is the investing in real estate property, with the sole intention of repairing or fixing it up and then re-selling it later on for a profit, in a neighborhood with a fast rising market.

But it isn't quite as simple as it sounds. It's going to take up most of your time once you get started. If you're going to be doing all the repairs and renovating yourself, it can be exhausting and back-breaking. It is also seen as a high risk, because any unforeseen problems could end up costing you much more time and money than you had initially estimated.

What To Look For When Considering a Real Estate Investment

1. Location, Location, Location:

This is extremely important, as you need to invest in a neighborhood with a rising market value and with good employment opportunities. You don't want to invest a million into buying and repairing a home in a neighborhood, where the average home only sells for half that amount. Even if your home is actually worth the investment, it may be harder to sell, if it isn't within the same market value as the other houses.

Remember, it is always better to invest in a poor home in a good area, than to invest in a good home in a bad neighborhood. This way, even after all repairs and expenses, you will still have a greater chance of selling and recuperating your expenses.

2. Schools, Shopping Centers and Amenities:

Similar to the 'Location' factor above, making a high risk investment in an area with no schools or shopping centers could cause you to hang on to the property for much longer than you had anticipated. Consider investing in a neighborhood that already has these facilities and you will find you will get more attractive offers when it's time to selling the property.

3. Market Value:

Make sure you have a thorough knowledge and understanding of the neighborhood and the current market value of the area you intend to purchase. Working with a solid, reputable real estate agent, not only can provide you with listings of available properties in the area, but they also have a sound knowledge of the neighborhood and knows the market value of the houses. A reputable real estate agent will also be able to give you sound advise you on your investment.

Overall, you should be aiming to purchase a property well below the current market value, so you will be able to sell at the current market value and make a profit.

4. Condition of the Property:

You want to invest in a house that is structurally sound. The idea is to fix up and repair the property as quickly as possible to re-sell it for a profit. You do not want to find out a month down the line, that the property has sagging foundations, a faulty wiring system or a sub-standard plumbing system. If you are not knowledgeable on these things, you need to bring in an expert to inspect the property and to advise you, before you decide to make the purchase. Both you and the property inspector need to physically view the property together in person.

5. Things you should be prepared to Repair or Upgrade:

Obviously, you should start with the basics and ensure that all windows and doors open and close properly, but beyond that, the newer and more modern a house appears to the buyer, the greater the chance you will have of selling it for a larger profit. If you plan to include any extra features, consider whether having them will add extra value to the house. A fancy chandelier may be very impressive, but is not a necessity and nor will it be a selling feature, if the rest of the house is in a poorer condition.

Before you invest, consider making a list of all the essential things you have to fix, such as (plumbing or electrical repairs, replacing locks, fixing roof leaks, etc) and then make a second list of any additional or new features that you would like to include, so to enhance the value of the property (internal and external lighting, upgrading the kitchen and bathroom, etc).

Lastly get quotes or estimates (labor and materials included) for the cost to cover each of the repairs and upgrades and finally add an additional 20% for any unforeseen expenses.

6. The Kitchen

The kitchen is often one of the most focal rooms of the house. It is often a place where family and visitors gravitate towards. Investing time and money on upgrading the kitchen should be one of your most important priorities. If you can afford to do so, plan on revamping or remodeling the kitchen, especially if it appears to be outdated. Also consider re-tiling the counter-tops and replacing old kitchen cupboards and sinks. This will give your house a whole new facelift, greater appeal and much needed added value!

The goal of successful real estate investing is to purchase a sound property, make reasonable repairs and upgrades within your budget and to re-sell for a profit. You should set realistic and achievable goals before you begin.

You want to make upgrades that you know you can afford and that will add additional re-sale value to the house. However, you don't want to overspend on upgrades so much, that the selling value of the property ends up far above the going market value, which you may struggle to sell.

Related Article: Tips That Will Get Your Home Sold Faster!

1 Comment

Blog Comment

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Posted By Howard - United States

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