Can A Novice Flip A Home?

Flipping properties has been happening for a long time, so it may be concept with which you are familiar. There are two basic methods for flipping a home. The first, and most common method, is to first purchase a home, fix or update it, and then sell the home at its new valuation. The other way that people flip homes is to purchase property during a time when property prices are down, and then selling the house once the market goes back up. While waiting for the property prices to increase, you can rent out the home to produce some income.

Finding Property to Flip

Those who are successful at flipping property know that location is key. Flipping property only works if the demand for homes is strong in that area. Study area sales. If there is a neighborhood with a few homes on the market that haven't sold in months or years, you'll need to avoid that area. The longer a home sits on the market, the farther the sales price drops before it sells.

One way to purchase inexpensive properties is by searching for bank foreclosures. These houses may or may not require renovations or repairs, so make sure you have a reliable home inspector who can tell you if there are issues that need attention. Bank foreclosures can cost thousands less than the price of real estate in that area. Once repairs are made, you stand to earn tens of thousands in profit when the house sells.

You can also look for homes with owners who may not have been able to keep up with the necessary repairs. Often, these homeowners are willing to drastically cut the price of their home in order to sell quickly. Again, you will need to make the repairs to up the home's value before you sell it, but there is still a lot of money to be made.

Those who are skilled in property flipping tend to look for one of four words in real estate listings, because they signify desperation on the seller's part:

-Fixer-Upper
-Foreclosed
-Must Sell
-Vacant

How to Get a Mortgage for a House You Intend to Flip

The crisis the mortgage industry has faced recently has made it a bit tougher to get financing for real estate that are going to be flipped. It is possible to do so. One thing that could make the process much simpler is if you have equity in your current home. If you do, you can then borrow the money for the new home against your current home. Another option is to get a mortgage for the new home and list it as a rental property. Before you use this option, make sure you understand all of your bank's regulations.

Whichever way you end up getting financing, a mortgage for a second home is usually only for eighty percent of the home's value. That means that it remains to you to come up with the remaining twenty percent. Some people use a credit card or another type of unsecured loan. Before you do this, find out what the interest rates are, since you will have to start paying the money back before the sale of the home.

Lenders that are experienced with homes that are going to be flipped could be much easier to deal with. For example, an experienced lender may give you 100 percent financing. Some lenders will also offer you extra financing for the needed repairs.

Make Sure You Know Your Financing

You need to fully understand the terms of the mortgage and the implications of the regulations on your home. For example, some lenders force you to keep the home for at least six months. Can you afford to keep the house for six months, as well as the undeterminable amount of time it will take to find a buyer? Make sure you have the income to cover these expenses before you make the purchase.

For your property flip, you may want to look at Santee affordable properties. You may also want to check out San Diego South Bay affordable homes for sale.