Buying and selling real estate can be a profitable endeavor for individuals that don’t mind rolling up their sleeves and handling surprises at every turn. It’s an especially good business for seniors with a disposable income and plenty of time to focus on the practical aspects of investing in real estate. However, there are lots of things to know. If you’re thinking about getting into the house-flipping business for the very first time, knowledge is your greatest asset.

Today’s blog post covers a few of the more subtle nuances of house flipping beyond buying a property for less than you sell it for.

The 70 Percent Rule

The 70 percent rule essentially states that when you’re looking for an investment home, you should not pay more than 70 percent of its value once repairs are made. This gives you a bit of wiggle room on pricing and in case you go over budget during repairs. But, how do you find a property at a 30 percent discount? It’s not always easy, but the process starts by being very selective with your real estate agent. A few tips include:

  • Choose an agent with experience in your area and that also has experience flipping houses. Weichert Team Realty is an excellent choice!

  • Target areas with broad economic growth. Look at the job market and population for the last 10 years or so. Areas with steady but not explosive growth may be the best for long-term investing.

  • Pick a property that is affordable to the area based on the median income.

A Business Legacy

As a new real estate investor, you may be thinking in the short term. However, your process of buying and selling real estate (or even managing properties) can be turned into a business that you can leave to your family. To get up and running as a formal business, follow these tips.

  • Incorporate as an LLC. This protects your assets and has a few tax advantages that your loved ones will appreciate.

  • Draft an operating agreement. This is a document that outlines how you manage all of the functional aspects of your decision, including finances. ZenBusiness explains that an operating agreement isn’t necessarily required but it’s something that the Small Business Administration says is unwise to operate without.

  • Hire an accountant. Unless your background is in accounting, it is almost always best to outsource the number crunching, payroll, and vendor payments to someone who understands everything from tax withholding to how to negotiate payment terms.

Start with a DIY Attitude

When you’re planning to flip houses, you make the most money by doing some of the dirty work yourself.

  • Learn how to do common repairs and get comfortable cleaning up messes. You’ll want to know how to restretch carpet, get the most common stains out of every surface, how to paint, and how to change out things like light switch covers and bathroom faucets.

  • Follow along with your home inspector during your first few purchases so that you know what to look for. While you should always utilize a home inspection service, this will help you better spot properties with issues to avoid right off the bat so you’re not paying for an inspection on a house that will never earn a profit.

Starting your own real estate investment business as a senior can help you leave a financial legacy for your loved ones. But, it’s not as simple as simply choosing a house and reselling it immediately. There are lots of things you should know. The above tips are just a few quick suggestions on how to get going. The best piece of advice: work with a realtor through the entire process. They can help you avoid making a mistake that will cost you in the long run.