For those who are entering the real estate business, one of the hottest trends is house-flipping. Although the concept of purchasing a pre-existing home and conducting a large-scale renovation for the goal of reselling the property sounds easy, there are many steps that must be done carefully and accurately. Here, we’ll look at some of the most important elements of flipping homes, whether it’s a first time for newbies or a refresher for real estate veterans.
Write your business plan.
If you’re new to the real estate business, the odds are that you’ll still have to establish your contracting and real estate company. For this, and especially if you’re considering financial alternatives such as a loan, you’ll begin by preparing your business plan. Like any other roadmap for a company’s success, this will provide a detailed outline of your industry experience and knowledge, reference your competition in the market, and explain your long-term goals. Every element of your intentions and plan should be listed, as lenders look kindly on borrowers who can prove their background and credit.
Depending upon your credit and intentions for remaining in the real estate business after this first flip project, you may want to consider a diverse number of possible loan options, including a bridge loan for small businesses, working with a private lender, or other real estate investors who specialize in commercial property and residential projects alike. Remember that every state has different regulations and options, such as a bridge loan lender in Oregon and other short term loans may have more benefits than other conventional financing options in New York or California. Every area is different, so research is important.
The First Steps of Your Plan
The exciting and important period now begins when you’ll be looking over your operating costs, scouting property and potential houses for renovations (if you haven’t already), finding your contractors and considering potential collaborators, such as local real estate agents and design firms.
A general contractor with years of experience will have a working knowledge of the permits you’ll need, as well as the universal requirements each step of the way. You can also gauge the timeline of your house’s completion and the estimated total budget by working closely with your contractor and their crew. To ensure you’ve found the right team, be sure to ask for references and a portfolio of previous residential projects they’ve completed, as this will give you an even better idea of their workflow.
Likewise, finding your interior design team should follow a good round of interviews and discussions. Having as many details about the project solidified can only help you in the long run, and both hard money lenders and financial institutions are known for investment property will look kindly on your work should you require any flip loans with a reasonable interest rate or alternative permanent financing to meet your deadlines.
Let the renovation begin!
If you hadn’t selected your property prior to kickstarting your real estate or construction company, this is the time to work with a local realtor in conducting market research and finding the best house for renovations. With the house selected (and possible construction loans in place), you’re now free to begin the creative work: getting the renovations underway.
You’ll want to be selective of the electricians, plumbers, and other specialists who will be taking part in the work. Keeping in mind that your new home will have to pass inspection and meet with zoning laws, every element from wiring to the water filtration service must hold up to scrutiny before you can take the house to the market.
Along the way, you’ll also have to work with your attorney regarding the new construction, and numerous permits will be needed, and each application process comes with its own deadlines. A good realtor in your corner can come in handy for getting these done in time, bringing you even closer to presenting new homeowners with their finished dream house.