How to be Successful in a House-Flipping Business?

In real estate, the concept of house-flipping is quite important. Several people choose house-flipping as their career and there is also a good chance of making it a lucrative career. In India, real estate (at present) is playing the role of the second most employment generating sector where the future of house-flipper seems to be quite bright.

Although the pandemic Covid -19 has negatively impacted the real estate sector of India, it already has started showing signs of overcoming the negative impact of the pandemic. Therefore, you can think about scaling your house-flipping business.

But the question is how to scale your house-flipping business? It is certainly a tough question if you are wishing to scale your house-flipping business. But don’t worry here we are with a promising solution!

In this blog, we are going to discuss how to scale your house-flipping business.

What is House-flipping?

The term ‘Flipping’ refers to the purchase of a property and holding it for a short time to sell the property for a quick profit.

In the case of house-flipping investors buy old houses at a low price and then tend to repair them. After the repair, the investors sell the houses for a profit. House-flipping is considered a short time real estate transaction as the investors have no intention of holding the property for a long period.

Things That Should Be Taken for Scaling the House-flipping Business

You should take several steps to scale your house-flipping business, such as

Analysis of the value of the old house before buying: Before buying a house for house-flipping you should carefully analyse the present value of the property and the amount of profit you can generate after reselling it. A wrong calculation of analysing the property value may lead to financial loss! Therefore, you should give extra emphasis in this regard.

Build and strengthen your industry relationship: Building and strengthening your relationship with the industry can successfully minimise your financial risk. With the strengthening of the relationship with the real estate industry, you can also ensure the increase of the availability of several house-flipping options for you. If you can ensure a large number of house-flipping options then you will have the freedom to choose the house-flipping option which seems to give you a good return.

Following the 70% rule in house flipping: The 70 % rule is a common term used by the realtors who are engaged in the house-flipping business. It states that an investor should invest 70% of the AVR (After Repair Value) of a house minus the repair cost. By following the 70% rule, the investor can determine how much amount of money should he/she invest in house-flipping for making a handsome amount of profit.
For example: If a home’s AVR is Rs 1,00,00,000 and it needs Rs 20,00,000 for repair, then according to the 70% rule, the investor should invest (70% of 1,00,00,000 – 20,00,000) = (70,00,000 – 20,00,000) = Rs 50,00,000.

Consider Getting Outside Your Geographic Comfort Zone: The location of the property is very important in any kind of real estate business. House-flipping is not an exceptional one. The location of the property has an important role in shaping the amount of your profit. For making a good profit you should overcome your habit of concentrating your business within your neighbouring areas. For scaling your house-flipping business you should go beyond your geographical comfort zone to ensure a good return on investment. Simultaneously, it also helps to increase your business area.

Evaluate Various Lenders: Before finalizing the house-flipping deal you should consult with various professional and non-professional lenders so that the risk associated with the deal can be minimised. It is a significant stage in house-flipping where you are required to do deep research so that you can understand the present market trends of the value of the property and get the best as well as the most flexible rate.

Use the online platform: To reach both the potential buyer and seller, especially during the time of pandemic like Covid – 19 you can use the opportunity of various online platforms. Taking the help of various online platforms will help you a lot in scaling your house-flipping business.

Manage loan for your house-flipping business: To scale your house flipping business you will require a lot of money and you may not have such amount of money at hand. To overcome the problem, you will require to do research in selecting a suitable loan for your house-flipping business. You might also focus on building a good relationship with banks and other lending organizations to avail loans within a short time and with easy terms and conditions.

On a Final Note

The task of scaling the house-flipping business is not as easy as it looks. The main problem is finding the best house for house flipping. You may require a lot of connections to find a good house for the flip. Still, we have tried to provide you with some guidance.

We hope that this blog has been helpful to you. Nevertheless, you might reach out to us (in case you have any concerns) via our mail id info@roodland.com.