Tips on Fixing and Flipping Houses for Profit

Oswaldo ShampsAll

Flipping houses can be profitable and rewarding in a lot of ways especially if you know how to play your cards well. This is one of the reasons why it remains relevant in the real estate field no matter how unstable the housing market is.

We cannot deny that such venture is associated with several risks and perhaps, some losses for some investors. On top of that, the increasing prices of homes and other residential properties has made flipping business more challenging in most housing markets.

For this reason, we are offering some suggestions and tips on how to choose the right property if you want to give this venture a brave shot. We are focusing our methods on basic strategies that can maximize your profits from a flip.

Search for Distressed Properties

The main objective of buying and reselling a property is to generate profit out of it. Distressed homes, like those on foreclosure or houses that require renovation, are just some of the properties that you can add on your list.

Basically, the largest percentage of profit becomes apparent the minute you purchase it and not necessarily when you resell it.

Here’s the deal; distressed properties are typically being offered to investors at a lower market value in comparison to other homes that are within the same area.

Real estate investors that have become successful in flipping houses know exactly how to identify a distressed property that can guarantee a good profit.

Some factors to consider are; location, extent of damage and cost of repair among others. Furthermore, successful house flippers actually make good money when they know well enough how to get rid of the distressed elements of the property in order to sell it for a profitable price.

Determine if Buying the Property Makes Sense

Make sure that the purchase price of the property plus the cost of renovation and other related costs will be able to provide you with a comfortable margin once it’s time to sell.

Take the time to review the market value of properties that are comparable to the one you’re investing on.

This can make you understand what types of properties actually sell and what does not within the area. Take into consideration factors like the size, location and state of the property.

Also, take the time to calculate the risks by looking at the worst-case scenario. Consider how close to the median home price your investment would be once it’s ready to be listed in the market for sale.

A lot of house flippers focus on properties that fall close to the median price within the neighborhood. The reason is because such properties are more likely to appeal to a larger market and a bigger audience compared to a property that’s at the top of the market.

Before investing on a property, check how close to the median home price your investment would be when you resell it.

Identify the Selling Points You Should Focus On

House flippers and buyers of flipped houses do not want to encounter any structural damages, impairments and major issues to a property. Therefore, both parties must check on this before even attempting to close a deal.

It is crucial to have the property inspected and assessed to minimize the risks and losses for both parties.

This is important in order to determine if the investment is worth the risk, the time and the effort.

Upon confirmation that there are no significant and consequential issues or damages to the property, the next factor to consider is the location.

Is the location safe and accessible to areas of interest? Is it marketable? Does it make sense for anyone to buy the property? Are the houses or units occupied by real homeowners? Or, is it located in an area where most houses are on foreclosure?

Identifying your selling points will make it easier for you to weigh the pros and cons of investing on a property.

Moreover, it can help you determine a suitable market and a perfect marketing strategy to make your venture successful, profitable and rewarding.

Location plays a vital role when investing on a property.

Be Aware of the Areas and Aspects that You Must Focus On

According to studies and market research, 60-80% of homebuyers play close attention to the quality of the kitchen and bathrooms.

Therefore, it is safe to conclude that kitchen and bathroom remodeling can offer some of the biggest returns.

Intelligent flippers and smart property investors strategically assess the restoration or renovation that a property requires.

The goal is to improve the property, pay attention to the most important elements and successfully market and resell it.

In addition to that, smart investors also have the skills and ability to recognize the “potential for profit” before even committing to buy it.

Needless to say, to become a successful house flipper, it is important to be on the lookout for properties with enough potential and allowance for you to add more value to it. You must learn how to easily identify the right properties and the most promising locations.

Finally, some elements that can add value to a house are; fresh new paint, efficient water damage restoration and mold elimination.

Other things to consider are; shiny and new bathroom fixtures, roof repair, new kitchen cabinets and additional storage spaces that maximize the area. Prioritize other aspects as necessary.

Restoration company needed

What Restoration Companies Need to Fix and Flip Properties

Charles BicktonRestoration

Restoration companies are indispensable in flipping houses. For every property that you invest on, it is important to work on the necessary repairs. By doing so, you can market it at a good selling price.

The role of restoration companies in carrying out your plans is essential to the core. The existing damages of the property can be given with the right attention and further impairment can be prevented.

Therefore, controlling the extent of damages is one thing; and planning for the repair is another. 

There are virtually a lot of restoration companies that serve real estate investors. In general, the service can be thorough and meticulous given the amount and level of competition between restoration companies. This is a huge advantage among investors and real estate brokers.

In a lot of ways, the services of restoration companies are extremely relevant to both residential and commercial properties. It makes it possible for homeowners to restore and save their properties so they can put their household back to normal. And, also allows businesses to continue with their operations.

Restoration companies evaluate the problem and categorizes the tasks that need to be completed. They have a team of experts who specializes on various aspects of property restoration.

And more importantly, they work towards preventing further damages and secondary problems in order to restore a property in its best shape.

Nature of Work

The main responsibility of restoration companies is to make a property livable, functional and operational in all aspects. They focus on the safety of all aspects ensuring that no secondary problems would arise. 

There are specific teams in charge of every aspect such as water system, roof, structural integrity and security among others. With specialized skills, good equipment and efficient methods, restoration teams can preserve the integrity of a property, take care of all the damages and restore it back in shape.

First Stage Damages

In general, water supply damage, roof damage and unwanted growth of molds are the first signs of property damage. Restoration companies are aware of these which is why they have designated teams that specialize on such property issues.

These are also the most common damages that severely affect the structural integrity of a property. Thus, it’s very usual for homeowners to file for insurance claims for such damages.

The Difference between Restoration and Insurance Companies

Restoration companies are completely different from insurance companies.

Restoration companies work on restoring a property back to its original state after it has been damaged by a calamity, accident or unforeseen events.

Insurance companies, on the other hand, provide coverage for the damages to a property. They perform assessment, cost estimate and thorough investigation to determine the extent of damage and how much coverage a property owner is entitled to.

Needless to say, restoration companies can offer their services with or without the involvement of an insurance provider. However, if an insurance provider offers reasonable settlement for property restoration, a restoration company can have suitable basis for the budget requirements.

Aside from property restoration and repair, restoration companies also offer assessment of damages, cost of estimate, property maintenance, damage inspection and investigation.

Classification of Damages and Services

There are different classification of damages that can occur at any point. Some are caused by natural calamities such as floods and hurricanes while others may be due to neglect. Other classifications fall under vandalism, unauthorized break in and fire damage.

Some damages are fairly common in every household and are unavoidable due to constant use which we refer to as “wear and tear”. However, there are also some that could happen momentarily following a natural disaster. 

Examples of these are water leakage due to flood and storm, mold growth, broken windows, roof affectation and secondary damages to furniture and to the property’s structure.

It is our responsibility to take the immediate action to your concerns and to prevent further damages the soonest time possible.

Most restoration companies are in tie-up partnership with various insurance companies particularly for damage disposal and clearing up services. 

Depending on the property owner’s insurance policy, restoration companies may likewise work on the damages of the property with reference to the settlement approved by the insurance provider.

Finding the Right Insurance for Property Investment

Insurance coverage for your property investment is important and counts as a necessity. A suitable insurance can protect your investment and assets. It can also provide you with peace of mind knowing that your property has the protection it needs.

Furthermore, having property insurance can spare you a lot of trouble and back-breaking costs in case of an unexpected financial consequence brought about by severe damages to your property.

More importantly, you insurance policy will enable you to purchase and acquire the property in the surest way. You should be aware that if you apply for a loan to buy a property, the first thing that the lender would want to see is proof of insurance.

Here’s what we can suggest on finding the right insurance for your property investment;

Get to know the coverage that you need to protect your investment

Identify the right coverage that is necessary in protecting your property. You would need to be aware of the three primary coverages which are Liability, Property and Business Income.

You may perform some research about the primary coverages to understand the pros and cons of each. Another option is to consult a public adjuster in Miami for professional advice on property insurance, coinsurance clause and how much insurance coverage you need.

Actual Cash Value (ACV) versus Replacement Cost (RC)

For most property-related policies, investors can typically choose on what basis they want to have their property insured. ACV and RC are both used as references for calculating the claim payout.

ACV basis considers property depreciation while RC does not. Here’s a typical scenario; in case of a complete loss or devastation of the property, a Replacement Cost (RV) valuation will pay out the cost of replacing the building based on current trends.

RC may cost more but it is more advisable.

 

Home inspection picture

How to Find Distressed Houses?

Charles BicktonReal Estate

Owning a home in America is the fulfillment of the ultimate American dream. If you happen to be looking for distressed houses for sale , assetcolumn.com can present to you a guide that can help you understand the ins and outs of purchasing a property and determine the resources offered by the Government.

A distressed property is basically a real estate that is available at a low selling price. The reason is because of an impending repossession or foreclosure. There are different types of distressed properties depending on what stage of foreclosure procedure the property is currently under.

If you are planning to buy such house or property, the following are some of the important points that you need to take into consideration;

Apply for mortgage loan and get approval

This is an important point that you need to take into consideration. You need to approach a banker for approval of your offer. In this way, you can have a better chance of acquiring the property of your choice.

However, there are possible drawbacks to this procedure. If a home has existing damages that require serious repair, the lenders will usually refuse to finance that property.

The reason is because that particular property requires costly repairs and you would need to manage some extra cash for its immediate and proper restoration. Otherwise, you may apply for a second loan to cover up the cost of the repair.

Find well-experienced and professional real estate agents

Problems are always bound to happen along with some legal issues when dealing with badly distressed properties. Therefore, it is advisable to find a highly-experienced and professional real estate agent who can handle such issues. You can search the internet for primary resources.

Owner’s Appraisal Strategies

An appraisal refers to a complete home valuation. If a home is not in good condition, the bank may deny to offer any discounts and other considerations due to the property’s poor state. A distressed property that requires serious repair and attention is considered as a low-value investment and banks are not very keen about such properties. As an option, you may ask your lender to conduct the full appraisal of that property.

Never invest properties in distressed neighborhoods

Just like with any other form of business, real estate investing is all about location and neighborhood. Needless to say, it is not a good idea to invest on a property that is located in a depressed and unappealing neighborhood. A distressed property within a distressed neighborhood is practically overkill. It would be all the more difficult for you to find a lender that would approve your loan.

Location is always important when investing on a property. It is not advisable to invest on a house that is located in a distressed neighborhood or in areas with safety issues.

An example of such neighborhoods are; areas where every home is at risk for foreclosure, condo units located in empty and unoccupied floors, and areas where safety of the residents is a major concern.

Pay attention to damage repair

Homeowners living in mortgaged homes who are forced to leave and evacuate the place may intentionally damage the property. In some cases, before leaving the house, the evicted homeowners would inflict damages on the appliances, fixtures, pipes, electrical wiring and other structures.

Therefore, it becomes extremely important to pay attention to all the damages left by the previous occupants and to prevent the occurrence of secondary problems.

Seek help from a professional home inspector

When buying a distressed house, never underestimate that importance of having a thorough home inspection. This is an essential step that you need to take to assess how badly damaged the property is and to determine the aspects that require immediate attention.

Hiring a professional and experienced home inspector can help you determine the extent of damages and cost estimate for repair.

In any case that the homeowner or your lender refuse to go through this process, you have to cancel the deal right away. Such reaction and outright refusal could indicate that there could be far more serious damages and problems to the property than you think.