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by Rhonda Underhill
Paying for college can be a stretch at any time, and if you’re balancing other endeavors, like family and home maintenance, you might need a bit of additional income. Returning to school as an adult can be rewarding, and finding a way to make it financially feasible is important. Although flipping houses involves a good deal of work, it can be lucrative. Read on for tips on how to make it work for you.
Investigate the Neighborhood First
Before you begin searching for a particular house to purchase and flip, devote some time to research the best areas for quickly reselling an upgraded property. Find listings for homes of the type you’re considering, and follow them to see how long it takes them to sell. Keep notes on which neighborhoods have more rapid sales. Look for areas where enhancements to the community are underway, such as new or upgraded schools, parks, and shopping areas, commuter line expansion, greenways, and increased access to highways. Areas with high-ranking schools are also likely to be lucrative.
Apply the 70% Rule
The 70% rule states that you should pay no more than 70% of the cost you hope to sell a property for (the after-repair value or ARV) minus the cost of repairs. No doubt, some research will be needed to determine average costs for various renovations, as well as the average price per square foot for similar properties in your area of interest. If you stick with this rule, you can avoid getting in over your head. The most popular renovations in flipped houses are the kitchen, bathroom, and flooring. Any or all of these could give the home a fresh appeal.
Deep Clean Before You Go Public
Once the repairs and renovations are completed, your property will need a good cleaning before it’s ready to be put on the market. You can hire a cleaning service, or you can save money by doing the cleaning yourself. You might want to invest in a corded stick vacuum for this task. This type of vacuum is lightweight and easily portable, and it can make reaching small spaces easier. Remember to clean up the exterior of the property, too, particularly the front entrance. The importance of curb appeal cannot be overstated. Keeping the vegetation trimmed and giving the front door a fresh coat of paint can dramatically elevate the appeal of your property.
You’re a Business Now
Now that you are ready to offer the property for rent, you’re actually in business. When choosing a structure for your company, you might want to consider becoming a limited liability partnership (LLC). This can be a good choice since it protects you and your assets if you are sued. An LLC also has some tax advantages and may be a more flexible way to operate. You’ll need to specify someone as the registered agent for your business. This is an individual who is available in person during normal business hours to represent the company to the government and any legal or tax professionals. You could do this yourself, although you might also hire someone through a registered agent service.
Keep Track of the Paperwork
Your house-flipping activity will generate a lot of paperwork, and it’s important to keep it organized and easy to find. There are online tools available to help you with this task. It’s a good idea to scan all paperwork, so you also have electronic copies in one location. Although you might initially compile all the digital records in one file, you may later need to break this down into smaller files. A PDF splitter tool can help you separate a big file into multiple smaller files. With this tool, the information you need can be easily pulled out, renamed, downloaded, and shared as needed.
Although flipping houses require a lot of work, it can pay off, and many have found it to be an excellent way to pay for a return to university. Make sure you’ve thoroughly researched the location of the house you intend to buy and flip, as this could be the determining factor in whether or not it sells quickly once you’ve completed the remodel. If you set your business up as an LLC, you’ll be risking far less. Before you market the home, be sure it is thoroughly cleaned, and you’ll be ready to present it to the public most effectively.
If you’re considering real estate investment as a means to finance your retirement years, check out Old Dawg’s REI Network, which includes a blog, newsletter, podcast, and website. This network provides information and community for real estate investors seeking to generate cash for retirement.
