House Flipping for Seniors 101
While many seniors look at retirement as a time to sit back, relax, and enjoy recreational pursuits, others see it as a time to launch Act 2 of life. House flipping, in particular, has become a popular pastime for many active retirees, and while it can be financially rewarding for the savvy flipper, there are a number of considerations to keep in mind if you want to attain success. A personal health and wellness coach like Lynne Patzelt, who specializes in helping people achieve their personal and professional visions, can be an invaluable asset as you embark on this exciting new phase of life.
What Is Flipping?
In a nutshell, house flipping involves buying a property for below market value, making improvements, then reselling it for a profit – in short order. According to Fortune Builders, keys to success include getting a house at the right price and in the right condition. While below-market houses are typically fixer-uppers, you ideally want to find a house that just needs cleaning and cosmetic repairs, rather than full-scale renovations. If you buy something that requires a significant amount of work, you could end up spending more than you’ll make.
What Can You Do?
House flipping works best for those who have some general fix-it skills and can either perform upgrades on their own or serve as their own general contractor and oversee the work of qualified professionals. According to This Old House, if you don’t have a knack for home improvement skills, you run the risk of getting over-charged, having a project take longer than anticipated, and cost more than you want to spend. Be honest with yourself about your skill levels, your finances, and your time availability.
What’s the Downside?
The downside of flipping comes when a renovation takes more time and money than you anticipated or takes longer to sell when complete. When you buy a house to flip, you’re still paying the mortgage, insurance, taxes, and utilities during the renovation, listing, sales, and closing process, so those costs need to be factored into your budget. If you buy a property that ends up needing more work than anticipated, you may need to cut your losses to get out from under it. Get familiar with the financial elements of flipping before moving ahead.
How Can You Get Started?
Set a budget and start with something small and simple. Keep in mind: You’ll need to have your finances in order, including a good credit score, a low debt-to-income ratio, a down payment, and proof of financial stability, whether that’s a side income, retirement savings, or pension. A knowledgeable real estate professional can be an asset, especially when it comes to identifying flippable properties and helping you assess your financial picture. There are numerous avenues for obtaining financing for your flip, so do your due diligence and find a formula that works for your unique needs.
Can You Build a Business?
If you decide to get into the house flipping business as a money-making venture, you’ll want to establish yourself as a limited liability company or LLC. Registering your doing business as a name can also be useful. Both practices can give you freedom and flexibility, help reduce some forms of liability, and make it easier when it’s time to do your taxes. You may even be able to purchase properties and finance work under your business entity, which can have both financial and tax advantages, especially when paying contractors and employees. You can streamline the process and save money by registering your domain using an online formation service.
House flipping is not a venture for the faint of heart or the novice investor, but it can be a rewarding, enjoyable, and profitable venture. Some seniors even enjoy living in houses they flip as they make repairs and updates. This allows them to live in different types of buildings in different areas of the country, or even the world.
Any midlife transition can have its challenges, but with the help of an expert like Lynne Patzelt, you can chart a successful path forward. Reach out today to learn more.
Karen Weeks is a Senior Lifestyle blogger. She struggled to find a new sense of purpose after retirement which made way to learn a new skill and took a computer course. She then created ElderWellness.net as a resource for seniors who wish to keep their minds, bodies and spirits well.
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