Washington, D.C. is home to thousands of people. Since the nation’s capital was founded over two hundred years ago, it has long been a place that attracts leaders from over the country. Today, Washington offers a great deal for residents. There’s a fast and efficient metro system that makes it easy to get to work quickly. There’s also an incredible array of museums and other attractions that are not only some of the best of their kind in the Western hemisphere. They’re also completely free. Those who wish to make this community their home base find that buying a home often makes a lot of sense. The housing market is strong in the nation’s capital and likely to remain so even in the face of potential economic issues that might affect other parts of the country. This makes it ripe for housing investors who would like to see profits from their ability to take old properties and fix them up for the needs of today’s contemporary residents.
While flipping a home can yield incredible profits, entering the housing market at all can pose obstacles. This is a relatively expensive housing market. Even starter homes and smaller apartments can start at the six figure level and go up. However, this also increases the potential for profits. A savvy investor can invest in many properties in a few years and watch as their capital builds and their profits only grow. Given the possibilities inherent in the markets in this area, it’s no wonder that it provides fertile ground for flippers with a firm eye on the bottom line. Those who can find sources of funding for the flipping they intend to do here will find it easy to translate their vision for any home into profit.
Finding Financial Help
Flippers who lack the kind of capital they need can find many potential ways to raise that capital. Home flipping is a tie honored tradition with historical roots. People have been remaking housing and selling them to others in the Washing area for as long as the city has been in existence. As a result, many forms of funding have arisen to help fill the financial needs of those who wish to enter this profession. Any who plans to make this either a calling or something they do in their spare time should investigate what kinds of places offer the fix and flip loans they need. While circumstances may vary, in general there are several different forms of funding. This includes the traditional bank loan, help from family and using the flipper’s already existing assets.
Getting the Details in Place
Getting all the details in place will bring that financial home flipping plan to life. The flipper should have a really good idea what everything is likely to cost before they start. This is why hiring an appraiser and a locally based contractor can provide the numbers that people need to make their vision come to life. They can offer real numbers. After that, the flipper can present such numbers to those who can help them financially. People with a prior history can turn to banks for assistance for a home business loan. Those who may have done similar work but may not have done any flipping before, can find other sources of money.
Many homeowners in Washington are well aware of the booming housing market. They’re often looking to expand their investments here. Reaching to family and friends in the area as well as community groups can be quite productive. A partnership with an interested party with the funding allows both parties to use their assets and talents to bring out profits from home flipping.
This kind of arrangement should be done in writing to make sure it is legally binding. Working with the seller directly can also work out to the advantage of both parties. A seller may want to move to a less expensive area or to retire after a long career in government service. However, they may lack the understanding to transform their home to bring it to market. A savvy flipper can split the costs of a home equity loan and the resulting profits.
Fixing and Flipping Properties in Washington DC
The real estate market in Washington DC remains a diverse mix of foreclosures and elegance. One corner could have an entire row of dilapidated foreclosure properties for sale while another neighborhood has a row of extravagant penthouses. This mix presents a wide range of “fix and flip” investment opportunities in Washington DC. Here are some lessons investors can use to start flipping properties in Washington DC.
What is “Fixing and Flipping” Properties
Fixing and flipping a property is the process of buying a home for pennies on the dollar, fixing it up and reselling immediately for a quick profit. Many investors flip properties in Washington DC to get their hands on fast cash. If you cannot sell your home right away, it is not considered a “flip.” The goal is always to sell the home fast for much more than the sales price. The best way to properly flip a home is to buy a home in a market where home values are on the rise.
Financing or Paying Cash
Flipping a home is not as easy as it is portrayed on the array of T.V. real estate investing shows. Investing in any type of real estate for profit is risky business. If you finance a flip and cannot sell it immediately, you will wind up paying thousands of dollars in interest until you sell the home. If you hold the property for too long, it could wipe out any profit you expected to collect from the flip.
Most experts agree it is smarter to pay cash to fix and flip a property in Washington DC. First off, cash eliminates the hassle of trying to find a lender to finance your deal. Secondly, you pay no interest when you pay cash for your flip. Third, you own the house outright and are free to complete as little or as many repairs as you see fit. When you finance a fix and flip property, lenders can limit what you can repair or replace on your investment.
Ideal Fix and Flip Properties
If you pay full market value for your first flip, you are off to a terrible start. The goal is to buy distressed properties for far less than their market value. Typically, distressed properties are in some form of default or foreclosure. When banks take possession of these properties, they often sell them at a reduced price to get them off their books. It costs banks a lot of money to maintain possession of a foreclosed property.
Most distressed homes need renovations or repairs. If a home requires extensive renovations, it might not be worth buying and flipping. Some distressed homes need so many repairs that any deal would not make sense even if the house was listed for free. However, many distressed homes only need minor repairs that cost a few thousand dollars. If you can find a home in Washington DC where prices are on the rise, it might pay to spend that money on those repairs and make the home comparable to other homes in the neighborhood.
Loans for Fix and Flip Properties
Loans for flipping properties are not as hard to find as you might think. There are several options, and each one has its own unique benefits and drawbacks. Here is a short list of loan options:
• Hard Money Loans– These loans are available through private investors or companies that specialize in hard money financing. Qualifying for these loans is easier than traditional mortgages. Hard money lenders approve financing based on the value of the investment and not your ability to repay the loan.
• Personal Loans- You can use an unsecured personal loan to finance fix and flip properties. There is no restriction on what you can do with the funds. However, unsecured personal loans require a high credit score and other strict requirements.
• Home Equity Loans- You can use the equity in your primary home to fix and flip a property. Equity is the market value of your home versus how much you owe. If you have 20 percent equity in your home, you can take out a loan against that equity and use the funds to buy an investment property.