In order to fix up and flip a house, you'll require the services of various professionals. And when you plan to flip houses as a long term investment strategy, you can see the value of putting together a great team of experts that you can turn to each time you invest in another property. There's the Realtor, of course, who will help you locate, buy, and then resell your flip properties. Here are some other vital members of your flipping team.
When you need money to finance your flipping, a mortgage broker is a much better option than a bank. A mortgage broker has access to many lending institutions and is in a position to find you the best rate and terms. Banks offer one-size-fits-all mortgages, and they prefer the more profitable long term loans over shorter term loans. A broker, who has more flexibility, can find a lender willing to offer you a short term loan and can also customize the mortgage to meet your needs. In addition to getting you the best rate, a mortgage broker can obtain a loan preapproval letter. This document tells the house seller that you are a serious buyer with ready cash.
The best way to find a mortgage broker is through referrals from people you know. If you have a Realtor, ask who he or she would recommend. You will want a mortgage broker who's been in the business for at least five years. When you meet with the broker, put your cards on the table right away. Tell him you want to buy a property to flip and you may be doing it more than once. Some brokers will see a client like you as too much work. Other brokers will love you and will even give you a better deal when you come back for a mortgage on your next house.
You do not pay the mortgage broker for services. Instead, the lender pays the broker a fee of 1% to 1.5% of the mortgage value. Your only costs are the property assessment and the credit report. If a mortgage broker demands fees up front, go to another broker.
All kinds of tax implications are associated with buying and selling real estate. One misleading of the tax law and you could lose thousands of dollars. To fulfill your tax obligations and to get full benefit from the legal tax advantages available to you, you need more than an ordinary accountant to look after your interests. This professional should have an extensive experience in real estate accounting and be thoroughly up to date on all the real estate tax laws. Before buying and selling property, consult your accountant to learn how the income may affect your capital gains. An accountant with expertise in real estate tax can help you decide when to sell a property and when to hold on it for maximum tax advantage.
It's essential to find an experienced agent who has deal with house flippers and who understands the types of insurance you'll require. This may include protection against flood damage and natural disasters, as well as coverage for more than one property at a time. The agent can also advise you about additional coverage related to on-site workers while the house is being renovated. Your best bet is an agent who comes recommended by someone on your team. Ask your Realtor and mortgage broker for referrals. You may also want to talk to the agent who carries the insurance policy on your vehicle.