House flipping is the art of purchasing a property as cheaply as possible and then selling it for maximum profit. There are dozens of methods and ways to do this but the most well known one is the fix and flip. As the name implies, the fix and flip consists of purchasing a house whose potential value is much higher than its current market value due to disrepairs, renovating or remodeling it to get its fair market value as high as possible then profiting from the eventual sale.
In order to minimize the risk from a flip, it is of the utmost important that the investor be familiar, before anything, with the real estate market in the area of the potential purchase: history, tendencies and future projections. If it looks favorable, the investor would be wise to get an official appraisal so that he or he can know what the house’s current value is before the purchasing as well as what is lowering the value and what repairs and additions would raise it. Once that has been established, the investor needs to determine how much all the needed repairs would cost, if he or she can afford them and if they would allow for a profit margin large enough to be worth the time expenditure. If and only if everything checks out and the investment appears worth pursuing should the property be obtained and the renovations commenced.
Some investors choose to perform the majority of the renovations themselves in order to minimize their financial investment, others choose to hire renovation crews and assume the full cost. Once the property has been completely repaired, renovated and landscaped it should be reappraised. Every i dotted, every t crossed, the house is now ready to be placed on the market and the investment is ready to pay off.