How to Flip a House During Your Retirement

How to Flip a House During Your Retirement

Written by Medina James

Flipping houses is a great way to earn money during your retirement years. But where do you start? Read on to find out from The Lake Life Realty Team how to get into the house-flipping business.

Start Your Business

If you’re serious about flipping houses, you may want to organize your business activities under an LLC. This will limit your personal liability while making your tax obligations more straightforward. You can use an online formation company to make the setup process painless.

As you market your business, you may also want to design an identifiable logo. This will make you stand out to your customers and give your business more credibility. You can use a logo creator online to create a logo you like. Start from a template that appeals to you, then customize the text, color scheme, and graphics to your liking. Once complete, you can download it for use.

Unless you intend to do all the work yourself, you’re going to hire help and that means managing your payroll. Invest in software that makes getting payroll done easy; you’ll save both time and money. Good software can automate most of the process, automatically withholding taxes, tracking time, and running direct deposits. You can even manage payroll from an app!

Prepare Your Financing

One of the most important elements in the house-flipping business is finding a way to limit your own financial risk while maximizing the house's return potential. A good rule of thumb is to go by the 70% After-Repair Value (ARV) rule. This means that you shouldn't pay more than 70% of the AVR of a house minus the cost of the repairs needed. This is how you'll earn a significant profit.

It's a good idea to speak with a mortgage advisor to understand how much money you can put down. Once you know how much money you can initially part with, it's time to find a house that's going to provide you with strong returns.

Look out for key moneymakers, such as location. If the house you're interested in is located near good schools or is in an up-and-coming area, this is good news. Avoid houses in areas with little appeal.

Plan Your Renovations

The renovations you complete on your fixer-upper will determine how much you can flip the property for. First, hire a good team. While it can be tempting to go with the cheapest labor out there, you'll get what you pay for.

It's also important to be realistic about the amount of energy you can give the project. If you're limited on the physical side of things, why not try your hand at designing to get your creative juices flowing?

Hire a team of experts to work out the type of renovations that are going to reap the highest reward. While it can be tempting to renovate every element of the house, focus on the moneymakers, such as a modernized kitchen.

Proceed with Caution

While prime-time television has shown us that flipping houses can be a lucrative career, it can also be a risky business if you're not sure what to look out for. The average cost for flipping a house is the purchase price plus 10% of the purchase price on top. This is due to the exponential costs of repairs and renovations that can quickly turn an inexpensive house into something much more costly.

When seeking out a fixer-upper, there are some elements to steer clear of, including bad plumbing, structural damage, and fragile foundations. These are some of the most costly repairs to undertake when flipping a house and should be avoided if possible. The last thing you want is a money pit, so make sure you get quality surveys done of the property beforehand.

Once your house is ready to sell, work with the trusted real estate professionals at The Lake Life Realty Team who will provide knowledgeable and expert service and help you maximize the sale of your New Hampshire-area property.

Get Started Today

If you're looking to earn a side income while enjoying your retirement years, then house flipping could be right for you.