There’s an old saying that land is a good investment since they’re not making more of it. Well, it may be true, but there are certainly enough innovations within the real estate business that experts and beginners alike can use to be smart in turning a profit. Over the past decade, flipping houses‚Äîpurchasing older homes and renovating the structure into a more modern, desirable home‚Äîhas become a profitable venture for real estate newbies. If you fall into that category, here are some tips for making your first project successful.
Knowing What You’re Getting Into
Even though the concept of purchasing an older home for resale sounds easy, there’s still a lot to remember. The first step of your project as a real estate investor, scouting areas for residential real estate for an investment property, will take up the bulk of your time. This could take anywhere from a few weeks to months, so you’ll have to be patient while your financing comes through from your lender and you search for the right area.
Once the preliminary stages are complete, you can prepare to stage, list, market, and actively seek a new homeowner for your finished renovation project. Scouting for homes to flip and designing the house’s interior and exterior are all exciting, but each task must be done carefully and accurately. Learning the local property value is crucial, so consider working with a real estate agent familiar with home improvement budgets to come up with your eventual pricing.
Real estate investing can be pricey, and understanding property value is important when it comes to your financing options and learning the strength of your home’s value. Applying for your investment loan early is a great option to get a pre-approval, allowing you, as the borrower, to know your full lending budget before the renovation even begins.
As a major bonus, preapproval letters can also give sellers more confidence in your offer. Be sure to consult real estate professionals on private money lending from a reputable financial institution, as well as your hard money options, as you may find ways around a higher interest rate. If you’re considering this route, be sure to get your personal credit in good shape first, as your credit score will impact your finance funding and interest rate. And remember, there are many private money lenders for real estate who are are a good fit in helping you meet your goals, as well as traditional lenders, private lenders, and bridge loan experts who offer real estate deals on fast funding.
The Renovation Process
The most common issue that could come along in your home improvement project is during the inspection, so make sure your hard work stands up to scrutiny. Keep an eye out for mold, faulty wiring on old appliances, and be aware of pest control. As annoying as those issues could become, all are avoidable.
As exciting as the renovation process can be, it’s also very involved. There are many areas that may need work. For example, if you need to redo the flooring, your budget may dictate whether you can opt for a wood floor, hardwood or laminate, linoleum, or tile, and just how many square feet can get remodeling for the new floor. Likewise, the house’s exterior and infrastructure may need work, and you may need to price vinyl siding or a new roof, kitchen cabinets and fixtures, or a full kitchen renovation, bedroom maintenance, calculating the best option for the cost of materials as you go along.
With that in mind, it’s a good idea to always be on-hand during the renovation process. You may not be doing much of the work yourself, but even if you got the right contractor with years of experience, you’ll want to keep an eye on your crew, trust that they know what they’re doing, but be accessible so you’re always part of your own team.
Once you’ve passed the inspection, you’ll be in the clear to take your new house to the market. In the best-case scenario, it should only take a matter of weeks to get the major construction completed on your investment opportunity. Now that you’re going to be meeting potential buyers, be ready to negotiate and remain patient with your homeowner’s timeline. They may have to go through their own financing and loan process for the total cost. Remember, both parties are excited at the prospect of living in your beautiful, new home!