House flipping is the profitable business of buying and selling houses. When you are thinking of starting a house rehabbing and flipping business, there are tips and factors that you have to consider. It is advisable that one should do their homework to ensure they do not end up making losses in the process. You should bear in mind the fact that there are no house capital gains tax rates for you since you will not hold the property for a year. You will have to pay the tax on your profit as an ordinary income. This therefore calls for you to be innovative in the kinds of houses that you rehab and flip
Here are some of the tips that you should know before you rehab and flip ugly houses for a profit:
For beginners, start small
If you are rehabbing and flipping an ugly house for the first time, you have to start small for better risk mitigation. Whether you are buying a house and flipping it in Leonia, Bergen County or any other location, you have to think about the risks in this kind of investment. You should buy a house or a condo that will not require a lot of money to rehabilitate. The entry level house will ensure that you will use less money in its rehabilitation needs. You can sell this house for a profit and with time, you will be doing it on a larger scale.
Estimate your rehab costs
One of the mistakes you do not want to make is rehabbing an ugly house for too much. This will cost you in the long run. When you are able to estimate the cost of repairs, you will know what to sell your house for. Ideally, you need to look at the roof, the plumbing, the electrical and the structure of the house. Consider the following:
- Roof- check for wood rot and any termite damage. Determine if the damage or lack thereof is worth the rehabilitation costs.
- Plumbing- you should look at the sinks and the bathrooms. Check the kitchen plumbing as well. Estimate the cost of rehabilitating these accessories and determine if it is worth your effort.
- Structure – the general of the house will tell you how much repairs need to be undertaken. If there are cracks and other problems, the cost of rehabbing such damage will be in the $7500 to $30000 range. Well, this simply makes it untenable.
- Electrical- check the fuse box. Determine when the electrical were last repaired. Get an electrician if you are not sure. This will offer you safety in determining risks.
Location of the house
Regardless of the cost of rehabbing an ugly house, you may not be able to sell it for a reasonable profit if it is not in the right location. It is always better that you do not sacrifice the location of the house for the price it is going for. It is much easier and better to sell your house in good neighborhoods where prices are high. In Hudson County, think of municipalities such as Jersey City and Hoboken among other good places.