A home loan is a convenient financing option that allows you to purchase a home, upgrade it and sell it for a profit. It features various benefits that make for a pleasant borrowing experience such as easy repayment and nominal interest rate. But, when you consider flipping a house for profit, there are several other things that you should keep in mind.
Here are 5 factors that you should be mindful of.
Note that the price of purchase determines whether it is a profit or loss:
The price at which you purchase your home in itself is an indicator of whether you will be able to sell it at a profit or loss. For example, if you purchase a home at price of Rs.50 lakh and if you find that no one is willing to pay more than Rs.40 lakh for it, you will make a loss. Purchase a property at the lowest price, in the best neighbourhood and then modify it to get a high resale value. Negotiate with the seller as much as possible.
Stick to the lower end of your budget so that you have enough money to do up the place before putting it back on the market. You can use a home loan to finance purchase more affordably.
Get home inspections and valuations done:
Before you purchase a home, make it a point to perform a thorough valuation of the home. This will help you accurately determine its monetary value and arrive at a resale price. Apart from this, it will also bring to light any structural flaws that the property has.
Additional Read: An easy guide to increase your existing home loan
Check location as it plays a key role:
To ensure the value of your home does not reduce over time, it is important to ensure you purchase a home in a thriving location or one that is up and coming. You should ensure that area you purchase your home in is residential and has amenities like hospitals, schools, bus stops, railway stations, ATMs and banks in close proximity. Any buyer will look for these facilities, so ensure that your property checks all the boxes.
Hire a good real-estate agent:
A good real estate agent can make the process simple and smooth. From helping you buy the home to selling it again, he can take care of all the government and legal formalities and paperwork. Again, you can use funds from your home loan to pay for this expense.
Make smart changes:
To ensure that your money goes the extra mile, ensure that you focus on the important changes that will transform the home first. For example, new flooring and tiling can give the house a fresh, stylish look. After you tackle the big tasks, focus on small flourishes that don’t cost much, but will impress prospective buyers. For example, faucets, premium showerheads and skirting don’t cost a fortune, but instantly amp up the value of a home.
These are some things that you should keep in mind before you decide to flip a home. Paying attention to these factors will ensure that you can make the profit that you have in mind.
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