House Flipping for Seniors: How to Finance Your Project Successfully
Maybe you have years of experience managing large projects, or perhaps you’ve had a penchant for interior design that you’re excited to explore. Either way, house flipping is the ticket for those with a little extra time on their hands and a varied skill set. According to Southern Living, house flipping is more popular than ever and has grown exponentially since 2006.
It is also perfect for seniors looking to get into real estate investment to diversify their portfolios. While getting into real estate can be as easy as buying a stock or mutual fund, house flipping is an alternative within real estate investment that is lucrative, rewarding, and engaging for the long term. Here’s how you can leverage this business for financial success.
Financing Has to Fit Your Investing History
Remember, the key to flipping a house is understanding your assets and income and whether or not they can work successfully for your investment. The main methods to fund a flip is to go to an investor or take out a loan, depending on your situation. Investing is an excellent option if you’ve purchased many properties and want to access a more significant pool of funds.
Loans are an equally viable option, especially if you’re looking to test the waters in the flipping business and see if it's worth the effort. You’ll also be able to take out a loan that covers not just the purchase price of the property but also the costs of flipping it. While loans do come with steep interest rates, working within a quick timeline to avoid mounting interest is a feasible workaround.
The Perfect House Is the Key to Profits
The house you decide to go with is going to make or break your profitability. There are so many factors to consider: the neighborhood, its demographic, school district, and nearby amenities. Approach everything from the perspective of future buyers, and factor in what gives the house maximum value. You can never go wrong with an up-and-coming neighborhood with a low crime rate to ensure a successful flip.
Then there are the bones of the house itself to consider. Does the property come with structural or foundational issues? Are there large-scale repairs and replacements you’ll need to make? Consider these questions while picking a property because they’ll impact your finances immensely. Extra renovations can set you back thousands of dollars — not to mention an extended timeline, leading to increased loan interest and billable hours. Instead, look for properties that are well built, have character, and can be transformed through cosmetic updates and fixtures.
Run Your Business on Autopilot
Flipping is a multi-faceted business and requires skills in negotiating, planning, time management, design, architecture, and more. As a senior, you’ll likely have experience with many of these responsibilities. Plumbers, HVAC technicians, electricians, and general contractors possess highly specialized skills that you’ll probably make use of at some time during your house flipping journey.
You’ll also need to budget for handling their paychecks when planning your finances. The easiest way to manage payroll is to automate it and have payments go out on a regular schedule. Accounting software that flexes with your consulting can come in handy for this. This takes all the guesswork out of the process and enables you to keep a close eye on your finances. You’ll be able to look up real-time reports for your income statements and balance sheets, automate your workflow and project profitability, and enjoy a dedicated account team to help resolve issues as they occur.
Selecting financial tools that help you get a bird's eye view of all the economic facets of your flipping project is crucial, as is the help of a licensed CPA like Gundling & Company CPA that can help with everything from tax planning to business entity selection.
Flipping homes requires lots of resources and plenty of time — perfect for post-retirement seniors with built-up funds and investments. The satisfaction of a job well done is sure to fulfill your inner entrepreneur and creativity, with lots of money coming in to ensure profitability. Utilize these tips for financial success, and you’ll be ready to get flipping in no time. Get in touch with Gundling & Company CPA to book your initial meeting.
Written By Guest Contributor, Julie Morse