- Erin Reynolds
How Seniors Can Get Into the Business of Flipping Houses
Currently, it’s a seller’s market for homes in the US. Since more people are looking to buy than are interested in selling, that creates great opportunities. Seniors interested in launching a house flipping business could be in luck as they could enter the industry when demand for homes is high.
In most cases, it’s easier to get a house flipping business off the ground than seniors would expect. If you want to get your company going, here’s what you need to know about getting into the exciting world of house flipping, courtesy of Treasea Johnson.
How to Form a Business
First and foremost, seniors who want to start flipping houses need to form a business. Usually, there are a few steps you’ll need to complete, including:
· Write a Business Plan
· Choose a Business Structure
· Register with the California Secretary of State
· Get an EIN for Taxes
· Handle Insurance and Licenses
When it comes to the business structure, most owners go with an LLC since it offers asset protection and tax advantages. However, there are other items on the checklist to consider, particularly regarding the operating agreement. That’s a critical document that determines involvement in your operation, including anything from financing to functional decisions.
Your new business needs a logo, but you don’t have to hire a designer to get one. You can use a free logo design tool instead. Just choose a template, then customize it with text, colors, and graphics until you have a design you like. Then you can download it to use as you need it.
Once your business is established, check out payroll software to help make your operations smoother. Good software will help you track time, withhold taxes, and create direct deposits quickly. And there are even apps to enable you to work on the go.
How to Pick the Right Properties
Buying a property to flip isn’t the same as purchasing a home you want to live in long term. You need to look for houses in established or up-and-coming neighborhoods that fall below the standard for the area. Essentially, you want to find the worst home on a great block. That way, you can update the property to the neighborhood norm and sell it quickly for a profit.
Focus on homes with solid bones, allowing you to avoid high-cost repairs with poor ROIs like roof replacements and foundation fixes. Additionally, look for properties that are a similar size to what’s available in the neighborhood, ensuring it either already has or could support the number of bedrooms and bathrooms you usually find there.
As you narrow down your options, you’ll need to determine if the price makes sense. Usually, you’ll need to estimate the cost of all of the work you’d like to complete. As you get that figure, make sure you don’t over-improve the property for the neighborhood, as you may not get a solid ROI if you do.
With an estimate in hand, you need to figure out if the amount of potential profit is reasonable. One way to determine if the price is right is by using the 70 percent rule, which provides you with a bit of a buffer and profit potential.
How to Buy the Home You Want to Flip
Once you find a property, you’ll need to buy it. Usually, buying with cash is the best option. You’ll avoid interest, make closing easier, and potentially stand out from other buyers.
However, if you can’t fully fund the purchase, you’ll need to look at financing. With traditional mortgages, you usually can’t get extra cash for updates. Additionally, some loan types — like FHA mortgages — have minimum property standards, something that a flip property may not meet.
If you can’t go with a traditional loan, look at renovation mortgages. You can also check out hard money loans, though those do have higher interest rates.
How to Update (and Sell) the Home
After your purchase, it’s time to get to work. Use your estimate as a guide, ensuring you focus on projects that were part of your initial plan. Resist the urge to go above what’s necessary for the neighborhood. Your kitchen updates, for example, may include adding a new range hood to compliment existing furnishings along with repainting the cabinets. But every kitchen remodel doesn’t require a full to-the-studs teardown.
Additionally, remain agile along the way. Time is money in the world of flipping, so you need to work quickly. If a preferred finish isn’t available, find a comparable in-stock option instead. That way, you can keep moving forward without breaking the bank.
Once you’re done, you’ll need to list the property. By partnering with a professional real estate agent like Treasea Johnson, you’ll get critical support, making it easier to secure a quick sale and get top dollar. Plus, you’ll be able to move on to your next flip sooner, all because you aren’t handling the entire sale alone.