House-flipping, the practice of buying homes with the intention of fixing them up for resale, has become increasingly popular over the last decade – and for good reason. When done correctly, flipping homes can be both lucrative and satisfying. Seniors looking to launch their own house flipping business can use this handy guide from Kruper Flooring and Design to get them on the path to success.
Know What to Avoid
Whether a house is a good fit for a flipping project depends on your skillset, budget and available time. There are some repairs that a home might need that are so extensive or expensive, though, that the money and effort necessary to complete the job cuts too much into your bottom line to make it worth it. Repairing foundations, replacing roofs and fixing termite damage are among the most costly issues a home can have according to The Zebra.
Flipping houses can also get pricey at tax time, particularly if the home you are flipping is in an expensive area. While it may be tempting to flip homes in the poshest district around, the taxes you’ll pay on it, along with any HOA fees, may make them less lucrative. Do your research prior to purchasing homes in affluent areas to ensure the money you make on it will be worth the investment. And if you have people working for you, make sure you use payroll processing services that will allow you to maintain precise records (which will save you a lot of headaches during the tax season).
When you begin making renovations, choose changes to the home that will be universally appealing. While building your dream man cave might seem like an attractive idea, research shows that you earn more money when you make upgrades that have wide appeal, not ones that will only intrigue a percentage of buyers.
Understand Your Funding Options
You can get a traditional mortgage to fund your house-flipping venture. You may find other funding options more suitable for your needs, though, as traditional mortgages can have longer timetables and stricter requirements than other funding sources.
Hard money loans are one popular option among house-flippers. These loans come from a private lender or company and typically have higher rates but shorter terms than other loans. One major benefit of a hard money loan is that the home is used as collateral and the lender gives less weight to your credit history and finances.
You can also fund your house-flipping using a private lender willing to loan you the necessary money. This might be someone you know, such as a friend or family, or it may be a lender you find online that deals specifically in funding house-flipping ventures. Angel investors, individuals or groups that are willing to invest in companies that are just starting out, can also be an option. Finding potential angel investors has never been easier, either, as there are many websites that exist with connecting angel investors to startups as their sole focus.
Starting a business is always a gamble, and it may be even more so when you are launching it in retirement and have a lot to lose. Forming a limited liability company or LLC helps to separate your assets from those of your business, giving you a layer of protection in case of issues with the company. Skip the lawyer’s office and fees and file yourself using an online formation service that will walk you through the process for a small fee. After that, the next step is to advertise! Luckily, you can save on a graphic designer and simply take advantage of a free-to-use logo maker tool, then market for free via social media.
House-flipping is a wonderful way to earn money and put your skills to use in retirement. Take advantage of today’s market by using strategic planning to find the most profitable investment property.
By Shirley Martin