How to Flip Bronx Homes?
Have you recently watched any TV shows dedicated to property flipping? Most people watch these shows for many reasons. Such as getting ideas on how to renovate their homes, for pure entertainment and to actually ponder if flipping Bronx Homes makes sense.
The biggest question is ” Can I flip Bronx Homes and make easy money “? First let me start off by saying there is no such thing as easy money! Flipping Bronx Homes is no easy task.
What is Property Flipping?
Property flipping is basically buying a property at a significantly reduced cost in comparison to others within a certain radius. You want to make sure that the property you are buying is similar to others close by. You don’t want to buy a 4 family home in a neighborhood with only single family homes. The comps that banks use to appraise the property might not be in your favor.
You need to also consider your time frame. Are you looking to buy a home to renovate and live in it for 2 years so you can reap the tax benefits? Or are you looking for a short term purchase that you can scoop up and do the appropriate renovations and sell quickly?
If you live in a home for 2 years and its your primary residence you can exclude $250,000 if you are single or $500,000 if you are married. Obviously this is only good for one property every 2 years.
If you are looking to flip Bronx Homes quickly then you will have to deal with the Capital Gains tax.
How do you determine your Capital Gains?
Purchase Price + Purchase Costs + Improvements + Selling Costs -Accumulated Depreciation = your Cost Basis
Now how to determine your profit or loss
Selling Price - Cost Basis = Gain or Loss
Calculate your taxes owed
Gain - Maximum or Partial Exclusion = Taxable Gain
Now that you know some tax basics we can move on to the next item. It goes without saying that you should consult your Accountant to discuss current tax changes as it relates to Real Estate. Your accountant is there to advise you.
Your Flipping Team
You don’t want to be a jack of all trades. It’s better to have brains on Tap than Brains on Top! Do you really want to handle every single aspect of property flipping? The answer is no. There are to many ways to lose money property flipping that you really want to have the right team working for you.
Real Estate Agent: Your local Real Estate Agent has their thumb on the Real Estate pulse in your local market. Their business is to stay current on what Bronx homes are currently selling for and if the property is being sold at a price that makes property flipping viable. Your Realtor can also help you negotiate the best possible price for the property. They have a tremendous amount of industry resources at their disposal. Click here for Bronx Real Estate Agents.
Property Inspector: This person is vital, you want to fully understand what the condition of the property is in. This will help you to estimate what the costs would be to renovate. You should not purchase a property without doing an inspection.
Contractors: You want to have reliable people on tap. You don’t want to buy a property and waste time looking for contractors. Identify a good contractor to work with in advance. You will also want to have a back up in case your main contractors work load is too large. You need a plumber, electrician, dry wall specialists, painter, bath & kitchen team amongst others.
Mortgage Pro: They can help you with financing a property flip. Your mortgage pro can also help you pre-approve prospective buyers after your renovations are complete.
Real Estate Attorney: You always need a great lawyer. Someone who specializes in Real Estate. They can help you go over contracts with your contractors, when you buy the property and sell the property.
Common Flipping Pitfalls
- Don’t quit your day job. Property flipping is not easy and can be costly.
- You must have money in the bank. Be liquid. There might be unexpected costs or longer than anticipated sale of the home.
- Buying sight unseen.
- Hiring an unlicensed or uninsured contractor.
- Buying too many properties with little experience.
- Underestimating costs.
- Overpaying for the property.
- Not having a plan.
- Not knowing local Zoning Laws or Permits required.
- Not having a team. Your team will be your guide during this venture.
Property flipping is a great way to earn a living. You are also engaging in a community service. If too many homes are dilapidated then local property values will decrease. By renovating an eye sore and selling it you will help your local market rebound.
If you are thinking about flipping Bronx Homes then give me a call and I can help you identify properties for sale that make property flipping viable.
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