Nowadays, more people are becoming interested in flipping houses, whether they have zero experience or have been doing it as a full-time career. Due to TV shows and videos online revolving around fixer-uppers and home renovations, anyone with the means can look forward to purchasing a worn-down property and performing a makeover to sell it off for more profit.
However, there are risks involved to house flipping, such as possibly spending more money than your original budget, using up plenty of your time, and taking a while to find interested homebuyers. It all comes down to how serious you are about the endeavor and understanding what you’re signing up for to guarantee the reward becomes worthwhile after long.
Keep reading below to learn more about managing a fixer-upper for the first time to ensure a potential homebuyer comes along to prove your project is worth all your time and hard work.
Understanding House Flipping
House flipping is the act of purchasing a real estate property and looking at it as an investment because you have the goal of selling it for a higher price after renovating it. You may want to keep it only for a reasonable amount of time before flipping it in exchange for a higher profit.
It’s only in recent times that fixer-uppers in America have gained recognition where plenty of homebuyers much prefer purchasing house flips because of their significant value. Often, you can call a certain property a flipped house if someone buys it off the market within a year.
Ways to Flip a House
Fix-and-Flip
A fix-and-flip happens when a person invests in a run-down home, immediately gets to work, performs the necessary construction and improvement projects, and sells it off the market. It’s a quick and hassle-free procedure that typically occurs within several months to a year.
Buy-and-Hold
A buy-and-hold is a house flipping method that involves an investor purchasing a property from the real estate market at a time when home values are constantly rising. The new homeowner isn’t obliged to renovate the home and prefers to keep things the same. Instead, they wait for the perfect time when the house gains a higher price before selling it to an interested buyer.
How to Fund a Flipped House
Using Your Own Savings
One direct method to help finance a fixer-upper you plan to flip once you get your hands on it is to use your hard-earned savings. However, if you’re already struggling to make ends meet and you have a lot of bills to pay, it may not be a good idea to use your cash to fund a house flip.
Addressing your priorities, avoiding witnessing your debts balloon, and keeping your responsibilities in check are far more critical than focusing on flipping a house. If you have other savings, such as your retirement funds, you still shouldn’t consider it as a way to fund a fixer-upper that won’t always guarantee you a good return on investment right away.
Applying for a Mortgage
If you wish to keep saving your money for the rainy days, you shouldn’t force yourself to use your cash on a house flip. Instead, you could think about applying for a fix-and-flip loan to save you from unwanted debt.
Getting a traditional mortgage loan to fund a fixer-upper is possible, but you must ensure you’re prepared for the challenges, such as the time it takes to receive approval. Mortgage lenders have to look at your financial background, work history, credit rating, and other requirements to verify that you live up to the part and can repay the loan on schedule.
Conclusion
Flipping a house isn’t for everyone because it requires time, energy, and money to accomplish, as well as the passion for managing a fixer-upper within a short period. If you’re dedicated to renovating homes in exchange for a significant sum, in the end, you could pursue house flipping to meet your needs. Whether you plan to opt for a fix-and-flip or buy-and-hold method, make sure you utilize the proper funding approach and rely on a professional mortgage broker to guarantee each decision you make leads you to success.
Are you looking to hire the best mortgage company in LA, USA, to help you flip houses? Shannon Christenot is a mortgage broker that strives to assist homebuyers and homeowners in need. Get in touch with us today at (818) 601-2231 to receive a mortgage quote!
