Most individuals are clueless when it comes to home flipping. But when done right, this proves to be a very lucrative source of income. If you’re a first-timer in the business, it can get quite tricky determining which parts of the house you need to renovate first. In a Salt Lake City home, is it bathroom remodeling that needs to get done as soon as possible? Or do you need to focus on the patio or the living room area?
Here’s a quick guide to flipping homes in Utah and what you need to know before you begin.
Check if you’re making the right investment on the right property
The trick is choosing a relatively old home in a prime location, as its market value falls below average and will be more affordable. You can consult a real estate agent so you can tell which locations are best and which houses are up for sale in the market.
The next step is adding up the costs for remodeling and renovations. It’s best to have the house inspected thoroughly so you can check if it contains issues and how severe these are (and to know if it’s still worth it to flip at the very end of it all). Be smart about choosing the house you’d want to flip because ideally, you wouldn’t want to shell out too much cash if it won’t end up with a solid profit.
Follow the 70 percent rule
Here’s where the real work begins: computing everything. The 70 percent rule states that one should be paying less than 70 percent of the property’s post-repair value, and subtracting that from the necessary cost for repairs. Don’t overpay and make sure you work with a trusted real estate agent so you can plan appropriately before you choose to dive in head-first.
It’s still best to pay in cash
Though it’s quite tempting to hold onto your liquid assets and take out a loan instead, remember to include the interest your potential loan can incur. In the long run, it may affect the profit you’ll be making, which in turn can defeat the purpose of flipping the house in the first place.
It’s best to have the cash on hand and prepare for this financially to avoid filing for a loan. Besides, flipping homes is not an easy feat, but with the right amount of preparation and research, it can prove to be a profit-generating business.
Adding everything up
Once you’ve chosen a location, a home, and a partner agent, it’s time to add everything up to determine how much you can make from this investment. Remember, the number of renovations and the commission your partner agent will receive at the end of the transaction, more or less give you an idea if you’re about to make a solid profit. List everything down and keep all options open. Lastly, take your time. Flipping homes, especially if you’re inexperienced, require due diligence each time.
Now that you’ve laid out all the things you need in the beginning, consider which parts of the home you’d like to remodel first. Put yourself in the position of potential buyers and ask which areas they usually survey. Bathroom remodeling is a popular choice, followed by a guest receiving areas and the master’s bedroom. Flipping homes in Utah may be difficult, but is a venture worth investing in.