Flipping Homes - A Profitable Business!

Flipping homes is turning out to be a  profitable business again according to Washington Post.  Research firm Realty Trac has reported 100,000 flipped homes during the first half of 2012, a 25% increase from the same period in year 2011.  Gross profit averaged almost $30,000 per property.

House flipping is not as easy as it seems. According to Mike LaCava, founder of House Flipping School, "You gotta be careful, really do your research and know what you're doing". Because choosing a property in wrong location, or spending too much on repairs, or choosing the wrong general contractor can cost you a lot of money or worst, a property that nobody wants.

Here are some tips on how to have a successful "flip":

1. Find a home with potential. House flippers usually find deteriorated properties in auctions or through other realtors.

2. Do your calculations. Flippers can only earn a profit when the selling price is higher than the original purchase price + repairs.  It's smart to add 10% buffer for miscellaneous costs, which may include attorney fees, taxes and commissions. Make sure to make a research on the market rate of the house within the location of the property. An accurate prediction of the repair costs is also very important!

3. Ask for professional help. If you do not any experience in making a house repair, it's better to seek the help of an expert. You might end up with a bigger costs if you attempt to do it yourself and besides it will be much faster if you ask a professional. Remember, flipping means disposing your property at the quickest possible time at a higher profit. Ask your Realtor for a list of professionals who can help you make the repair.  They can also help you calculate the after repair value of your property.

4. Design for buyers. Keep your colors neutral.  Installing a higher-quality cabinets, or a built-in wine cooler can make your home stand out from the others.

5. Make sure that your home is ready before putting it on the market. Wait until all the repairs are completed before putting the property up for sale. If you put it in the market too soon, then you will be getting design requests from buyers who have not closed on the property yet.

6. Get a pre-qualified buyer. Make sure that your potential buyer is qualified to purchase the property.  If he/she is not yet qualified, the buying process may take longer and you will incur higher carrying costs eating up your profit.

It's best to consult with your realtor to help you in the entire " house flipping" process. Your realtor will make sure that you get the best deal in the market.