So you’re looking for a new business venture. Starting out can be scary, especially when there are so many opportunities available — with many of them being quite risky. Many find themselves deciding to go the route of renovating homes and selling them for a profit; or, as it is commonly known, flipping houses. Flipping a house can be an amazing experience, and many end up flipping houses for a living. At the same time, it can be quite risky, as flipping homes means investing money upfront without knowing exactly how much money you’re going to get back. The issue there is renovation financing. Flipping a house can get expensive, as you would imagine — between buying the house and paying for all of the necessary fixes and upgrades, the bills can get steep. In this case, you do need to spend money to make money. But where do you get the money from? And once you do have the money necessary, how do you choose which properties are the right ones to flip, and which ones are duds? We’ll look into all of that as we explore things like real estate secured lending, renovating houses, and selling them for a profit. Let’s dive in!
Real Estate Secured Lending: What Is It, And How Does It Work?
Real estate secured lending is a route that many interested in commercial property investing take. Yet, while we’re so familiar with the traditional loan system, many do not understand how real estate secured lending works, or even what it is in the first place. First, understand why many are denied traditional loans. It’s not necessarily because they have terrible credit or none at all — it’s because our traditional loan system is extremely picky when it comes to potential borrowers. Renovation lending is hard to find, and many who want to take out loans for this reason have to have a certain amount of money in the bank, a certain credit history, and so on. With that being said, real estate secured lending is an alternative that is open to far many more people. The way this tactic, with its loans sometimes referred to as hard money rehab loans, works is much simpler than that of traditional loans. Hard money loans are secured with equity — most of the time, with homes with have 30% to 50% in equity, which makes the entire process more secure for all involved. Usually, these loans have a much quicker turnaround rate of about seven to 14 processing days, and are taken out for a duration of a maximum of five years. In many ways, they are perfect for people who want to flip homes.
Flipping Homes: What Does It Take?
It’s advisable that you get a mentor in the renovation industry before flipping a house. A good renovation can make or break the way a house sells. Therefore, you must choose a home with potential, but also with enough problems that it would be a good buy off of which you could make some money. Remember that some renovation projects are so massive that they don’t justify the buy — don’t go crazy over a home that isn’t worth your time, in other words. Another important thing to consider is location. If a house is rundown but in a good location, it could be a great potential renovation. A great location can make up for a number of sins — and once the house is fixed up, it could easy make a massive profit.
The Career: Can Flipping Houses Become A Lifelong Job?
Many people flip houses a few times and then never again. Others find that they love it. If you become good at flipping houses, it could be a career path for you. You just have to be smart, and ready to really sell a home. It’s a tough job, but the rewards can be great in the long term.