More than half of Americans retire before they are old enough to start collecting Social Security. Some who fall into this category still need to earn income to support their retirement. Flipping houses is one of the ways seniors can accomplish this goal. Here are some tips on how to begin your house flipping journey.
If you want to earn a significant income from house flipping, you need to treat it like a serious business. A good way to start is to register your business as a limited liability company. An LLC provides you with liability protection for your personal assets, which is particularly important for seniors who can't afford to lose their retirement savings. It may also have some tax benefits.
In addition to choosing your business structure, you need an operating agreement. This outlines who has the power to make decisions about your company's finances and operating decisions. You may want to seek the assistance of a business attorney or formation service during this process.
Finding Your First House to Flip
The key to making money flipping houses is to either purchase one that is for sale at or below market value or one that you can make a profit on by making repairs and improvements. You’ll need to sell it for more than the total cost of the purchase price plus repairs and upgrades. Start by choosing the right location.
It is best to avoid areas with expensive real estate and instead give preference to places where you can purchase homes for lower prices. However, keep in mind that you need to be able to sell the home, so avoid markets where houses are taking a long time to sell.
Take advantage of tools that estimate rehab costs and project potential sales or rental prices for investment properties. Other potential places to look include foreclosure databases and your network of friends, family, and former coworkers. Other seniors may be a good resource because many decide to sell their homes and downsize during their retirement.
Traditional mortgages usually don't make sense for house flipping. Most are 15 to 30-year loans designed for people who will live in the home a long time, not for someone who intends to quickly resell. Additionally, most banks don't want to provide a traditional mortgage for house flipping. Other potential sources of funding include private lenders, online lenders, hard money lenders, and crowdfunding sites.
Renovating Your Home
Renovations are necessary to make money from most house-flipping investments. However, it is critical to choose renovations that add more value to the sales price than they cost to make. Kitchen renovations often provide the most value for your dollar. Buyers are generally willing to pay a premium for a high-end kitchen than for other upgrades. You’ll want to paint the cabinets and update any fixtures as needed — adding a range hood above the stove is a nice touch. New appliances also make a solid addition as well.
Selling Your Home
Once your renovations are complete, the final step is selling the home for the price you want. Selling the home yourself can save you money on commissions but may result in a lower sales price and longer selling time. If you hire a real estate agent, you may get a faster sale and you can start looking for your next investment while the realtor sells your house.
If you do sell your house yourself, it can be helpful to use social media to get the word out. One way to help is by adding a custom banner to your various social media accounts. You can design banners online with ease by using a creation tool. They can be customized with images and text to meet your needs and resized to fit multiple accounts. This lets the public know your house is ready to sell.
There are many steps and skills involved with running a successful house flipping business. However, it can be a fun and effective way to earn money for retirement.
Megan Cooper thinks there’s nothing more satisfying than a well-executed DIY project. For her, it all started a few years ago when she built a bookshelf out of reclaimed wood. She hasn’t looked back since. Today, she regularly tackles home decor DIY projects big and small. She created reallifehome.net to share all of the tips, advice, and resources that she has found most useful as she’s learned the ins and outs of DIY.