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As a senior, you’ve probably bought or sold a house or two in your life, and you’ve certainly lived in a few. The business of “flipping” houses — that is, buying and renovating properties to resell at a profit —is now more lucrative than ever, according to a recent report. If you’re considering a post-retirement foray into the house flipping business, you should know that it’s not always as easy and profitable as it looks on television.
While success is far from guaranteed, it is possible to make real profits through reselling homes. Keeping these three tips in mind will help you achieve house-flipping success. This is an example of the insightful senior-focused content you can find on The Livingston County Consortium on Aging blog.
1. Find the Right Property
Choosing the right property to flip is key to realizing a return on your efforts. In selecting a house to flip, always consider both the house itself and the neighborhood in which it’s located: Both can have a significant effect on your potential profits.
Spend some time researching any potential neighborhood where you might want to invest. Traditional housing market metrics, such as days on market and average sale prices, are important but don’t forget about other statistics, such as crime rates or owner-occupancy figures. Housing prices will likely be lowest in distressed neighborhoods, but selling the home post-renovation will be easier in more high-demand areas.
For any house you’re considering, never pay a purchase price that’s higher than 70% of your estimated post-renovation resale price. The final sale price needs to substantially exceed the total of all of your costs, including
2. Finance Expenses Correctly
Being a senior often means that you have a bit of an advantage when it comes to financing your house-flipping venture. You’ve likely accrued some savings, home equity, or both over your lifetime. These assets can make it easier for you to qualify for financing options, or may even enable you to self-finance much of your first flip. That said, use extreme caution when tapping your own funds. Never jeopardize your home or your entire life savings on a risky resell.
To safeguard yourself and your property, it’s usually best to form a business identity through which to handle your house-flipping finances. A limited liability corporation offers tax benefits and reduced paperwork along with asset protection. Forming an LLC is usually a simple process, depending on your state’s requirements. So how to start an LLC in Michigan? You can save time and avoid pricey legal fees by using an online business formation service.
3. Fulfill Your Obligations
One of the top mistakes people make when flipping houses is trying to handle everything themselves. By enlisting a talented team, you greatly improve your odds of success. You’ll likely need to recruit, at a minimum:
For employees, it’s best to set up a regular pay rate and schedule. Good payroll software can help automate this process. For independent contractors, aim to pay them in draws as the work is completed. Never wait until the end of the project to fulfill your obligations.
Flipping houses can be a fun and rewarding way for seniors to earn extra income. Keeping these tips in mind will help you maximize your profits.