First-Time House-Flipping How-Tos for Seniors
Have you considered starting a house-flipping business? As a senior with time and the motivation to work hard, it can be a good idea to go into the house-flipping industry. This is one of the businesses that give you the opportunity to get exercise while making some money. Here is an outline the things you should consider that will help you get started with flipping houses. Consider Financing To acquire the first house to flip, you need money. There are costs involved when buying a house to flip, including renovations and marketing. The money you need to renovate the house depends on market conditions and you should also consider utilities, taxes, and insurance while working on it. The Mortgage Reports notes that one of the options is getting a loan, which can be difficult sometimes as banks consider first-time flippers risky borrowers. Once you get several houses under your belt, you’ll raise your profile and find it easier to get approved for credit. Use Software to Your Advantage As a property flipper, you’re now running your own business, which calls for utilizing technology to help with areas like marketing. Your logo, for example, will be on your business cards, your letterhead, your website, and all your social media accounts. The challenge with designing an eye-catching logo is that the combination of graphics and text must convey your values and your messaging, but you don’t have to spend a fortune on a graphic designer to get this done. You can go online and make a logo for free today using one of thousands of professionally designed logo templates that you can customize to your liking. SimplyShowing points out that there will likely be pros that you’ll use for repairs and upgrades that you either aren’t equipped to do yourself or don’t have the time to complete. You may also employ a property manager to handle ongoing maintenance like lawncare and appliance upkeep. In any of these cases, your best bet is to check out payroll software that is robust enough to handle timely distribution of paychecks, as well as tracking labor expenses per project. Look for a platform that will generate W-2s and direct deposit. How to Find the Ideal Property Not every house out there is a good investment. Buying a house “as is” for example may not be as beneficial as you’d think, as there’s always the possibility of costly repairs in the future. Finding good real estate will help you sell without problems, and you can raise your profits significantly. First, ensure the home is in a great location. Begin with searching local cities and neighborhoods. Consider areas with rising real estate sales, a thriving town, employment growth, and other indicators. Also, consider safety in each neighborhood. You can use services like ADT to know what’s happening in a neighborhood. Next, check the condition of the home to know if it would require too many renovations. If the condition is not too bad, calculate the market value of the property. Don’t overvalue as you still need money for renovations and other upgrades. Understand the 70% Rule When analyzing the amount they can pay for a house, skilled flippers use the 70% rule. The rule states one should never pay more than 70% of the properties’ value after repair before all those repairs are done. This means if the after repair value (ARV) of the home is $200,000 and you need $30,000 in repairs, the rule states you should not pay anything more than $110,000 for the home. This is a valuable guide you can use when you enter the house flipping business. Be Cautious About Fixer-Upper Property When buying fixer-upper property, you need to be cautious. While it’s an option when you want to save money, you can be stuck with massive costs for renovations and repairs. Ensure the home does not require a major overhaul to be ready for the market. Things like foundation problems, HVAC upgrades, mold and asbestos, and electrical work could be a deal-breaker. While estimating repair costs, always add about 20% in the estimate to ensure you don’t end with a property that would take you ages to sell. Flipping houses is a risky business that can also be rewarding if you understand how to approach it. If you make the right decisions, you will make good money. Learn everything about flipping houses, including payroll processing, dealing with taxes, evaluating a property for repairs, and calculating market value. This guide could be the starting place for your journey in house-flipping. Franklin Investment Realty specializes in the acquisition of investment properties, leasing, management, sales and development of properties in the Greater Philadelphia area. Contact us today for more info! (215) 382-7368 – Shirley Martin
Should You Rent Or Buy?
Deciding to rent or buy a home is a major financial decision. It affects almost every aspect of your life. So, how do you know which option is the best one for your situation? There are advantages and disadvantages to both renting and buying. Purchasing a home involves several steps that include getting approved for a loan. You also have to come up with a down payment. Renting is easier. It is also more affordable, but do you want to forego owning property? If you are having trouble deciding, here’s what you want to consider before signing a rental or mortgage agreement. Do You Want The Same Address for Several Years? Do you want to become part of a community or have the flexibility of changing addresses every year or so? The answer to this question can help you decide if renting or buying is the right option. Most buyers plan on staying in the home for at least five years. It gives you time to settle into the neighborhood and make the house your home. You can sell a newly purchased home after a year or two, but you can end up losing money on closing and moving costs. Compare Average Home and Rental Prices It’s a good idea to compare the costs associated with renting versus buying. Initially, renting is often the more cost-effective option. You don’t have to pay closing costs, come up with an adequate down payment, and have cash set aside for home maintenance. Home repairs can also quickly add up, depending on the property’s condition. Most rental contracts only require a security deposit, along with the first and last month’s rent. Home buying is more expensive in the beginning, but over time it is more cost-effective than renting. Your mortgage payments are usually lower than monthly rent payments. You also have the option of refinancing. It does extend your mortgage terms, but you are paying a little less each month. Renters can only expect their costs to increase, sometimes by 5% or higher. Homeowners receive tax breaks not available to renters. Don’t forget about property value. Most home values increase over the years, putting extra equity in your pocket. Consider Your Current Lifestyle Homeownership doesn’t fit every lifestyle. Frequent travelers, either for work or pleasure, may want to focus on finding a rental property. Someone else handles the upkeep, maintenance, and repairs, leaving you free to see the world without worries. Anyone expecting a promotion to a position in another city may also want to hold off on buying a home. You aren’t going to have enough time to build up any equity in the property. You may also have to take a lower asking price if your move is within a few weeks or days. Renters may lose their security deposit for an early move, but it’s less of a financial hit than you get as a homeowner. Take a Look at Your Finances Before you make any decisions, take a look at your finances. Add up the costs associated with buying versus renting and see what you can comfortably afford. A common mistake homebuyers make is buying a house they can’t afford. It’s nice to have some extra space, but the problems come when you realize the mortgage payments are higher than you expected. Ideally, you want your down payment to be around 20% of the home’s selling price. You also want to have enough cash leftover for maintenance and repairs. Your finances also determine what improvements you can make on the property. For example, if the property is in an area where storms are common you may want to add a portable power generator to keep the lights on. Renters have the advantage of relying on their landlord or property manager to take care of these improvements. If you are not comfortable with these and other costs associated with owning a home, renting may be a good option for the present time. Ready to start looking for a new home, contact Franklin Investment Realty today to see how we can help make homeownership a reality. – Karl Kennedy