Strategies to Flip a House as a Senior
House flipping is a popular and fun way of making money for those who have sufficient investment capital and the time to renovate a property. Many seniors fall into this category and choose to spend their retirement years buying properties to renovate and sell. If you're thinking of doing this, Kelli Prather has tips that could help you maximize your chances of success.
Stick to Areas You Know Well
The formula for house flipping is simple: Buy a cheap house, invest time into easy, low-cost renovations, then sell the house for a profit. This may work well if you can find a property that's affordable for the area and you know which improvements will have the biggest impact on the property's value.
It's easier to make good decisions if you invest in properties in areas you know well. Don't fall victim to the temptation to purchase a property in a location you don't know just because it's cheap. The low cost could be because of crime problems, development plans, or economic issues a local would know about and that would make the property hard to sell. Alternatively, you can work with Kelli to identify which areas are ideal for you.
The housing market is thriving at the moment, thanks in part to the pandemic. There are fewer people actively flipping houses, and profits increased during 2020 for those in the business, but profits fell in the first quarter of 2021. Local knowledge makes investing in properties to flip less risky.
Not All Home Repairs Are Easy
Decorating, basic carpentry, cleaning, and general renovations are simple. If you had a trade in your youth, you might be able to do more involved renovations as well. But some home repairs are complicated and more expensive than you might expect.
Do your homework and learn which home renovations add value, then find the ones you can afford to do and that you'll be able to complete in a reasonable time. A good fixer-upper property is one that's undervalued and could benefit from simple changes, such as bathroom improvements or exterior redecorating to add curb appeal.
Be Realistic About Your Budget and Abilities
If you already have a mortgage, finding a second mortgage for property flipping may be a challenge. If you fully own your home, life will be easier. Talk to some banks about mortgages and find out what their affordability checks are. Pay for a property inspection to make sure there are no issues with mold or foundations because those types of problems can be incredibly costly to fix.
The bigger the deposit you can put down, the more likely you are to get a good rate on the mortgage, but make sure you have enough working capital for the renovation work. When you're pricing the costs, add 20% to the estimate for unforeseen expenses. Check and recheck your figures to ensure that if you sell the property for a fair price, you'll make a profit after closing costs, renovations, and taxes are paid.
Property Flipping Isn't for Everyone
Property flipping can be an enjoyable business for those who have the know-how, but it can also backfire, leaving you stuck with an expensive and hard-to-sell property. If you're expecting easy money, you could be disappointed. Do your homework, though, and you could have a good way to spend your retirement.
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