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Many seniors want to remain active and maintain a source of income. If you’re in that group, flipping houses in Maryland could give you the best of both worlds. If you’re ready to get started, Rivero Realtors of RE/MAX Advantage offers six dos to help you succeed.
Starting as a sole proprietor is an option, but it’s not ideal. If you want to protect yourself and your assets, it’s better to form an LLC. You’ll reduce liability, maintain flexibility, and gain access to tax benefits while limiting your paperwork.
Plus, you can get your LLC off the ground quickly. Formation services simplify the process and are more affordable than a lawyer, making them a great choice if you don’t want to go it alone.
Once your business is established, you’ll want to invest in tools that make operations and management easier. A good place to start is with software that helps you get payroll done fast. No one wants to be stuck at a computer for hours trying to accomplish one thing, but the right software can provide all the functionality you need, from time tracking to direct deposit, so you can run payroll in minutes. This will save you time and money, enabling you to get on with your day.
Generally speaking, you want to get your funding straightened out before you start looking for homes to flip. In some cases, traditional financing works. However, if the house isn’t habitable in its current state, you may not qualify for certain mortgages. For instance, FHA mortgages have minimum property standards, so they may not work for flips.
Fortunately, there are alternative ways to fund a flip. You could go with a renovation mortgage or hard money loan. Partnering with a private investor may also be an option.
You need to use the right approach if you want to flip houses. Usually, you want to focus on highly desirable parts of town and find properties that are well below neighborhood norms.
If you see a property in disrepair, research comps to determine what updates you’ll need to make and how much the value could increase after the work is done. Along the way, follow the 70 percent rule to narrow down your options. That way, there’s enough profit potential to make your efforts worthwhile.
While buying a fixer-upper to flip helps you save on the purchase price, the required repairs can come with massive price tags. Additionally, while some projects have a solid ROI, others don’t.
For example, foundation repairs often cost between $2,000–$7,000, though the price can be higher for severe problems. However, regardless of what you spend, you’re almost guaranteed not to get anything close to all of that money back.
Before you buy, get a home inspection. After that, see if you can find a contractor who will provide an estimate before you make the purchase or use estimation tools to get figures yourself.
Once you’ve got an estimate, add 20%, particularly if you’re doing electrical work, HVAC upgrades, foundation problems, or addressing issues with asbestos or mold. That way, you have a buffer against the unexpected.
Usually, updates fall into one of two categories. First, there are necessities. You need to fix issues that could prevent the house from passing inspection, such as problems with the overall structure or core systems.
Second, there are buyer-targeted updates. These typically include aesthetic and feature changes that make the house desirable. Fresh paint, new flooring, kitchen remodels, bathroom updates, smart upgrades, and even outdoor kitchens with a grill and range hood fall in this category.
Again, use comps as a guide. See what houses in the area typically offer and aim for a point in that zone. That way, you don’t under- or over-improve for the neighborhood.
Whether it’s time to buy or sell, using a real estate agent makes a difference. You’ll get the inside scoop on properties with flipping potential. Plus, they’ll help you find comps, pick competitive sale prices, sort through offers, and more when it’s time to sell.
By working with a real estate agent, you also get more time to focus on your company. That way, you can keep moving forward while your agent keeps the properties flowing. Reach out to Rivero Realtors to get started!