Fix and Flip Advice
Flipping houses has become an extremely popular business, making a profit isn’t as easy as it looks like on TV. An inherently risky endeavor, you could end up losing your whole investment if you don’t play it smart. But when things work out, the payout can be worth the risk. Here are some tips to maximize profit while flipping homes.
First of all, you need to know how much you can spend. There are designated calculators for figuring how how much you can spend on purchasing and renovation costs. You need to know what the max price is before you can start searching for deals. Typically, if you make a low offer, negotiations will bring the price up, so keep that in mind.
When you see a steal come onto the market. Make an offer right away. Bigger values will bring in more offers. Oftentimes, the first offers to come in will have an advantage. If you act fast, you can have your offer ready in 2-4 hours. If you think there aren’t going to multiple offers, just start with your best offer. If you give a low offer and plan to negotiate, you may lose out to someone else who started with a higher offer. If you have the means, go with a cash offer. This will have the most appeal to sellers.
While houses that are new on the market are often the most visible, you can get a better offer usually by seeking out properties that have been on the market for more than two months. These sellers will be more desperate and, thus, more willing to negotiate on the price.
Consider the Size of the Property
Larger properties are appealing because they can be sold for more money. Big houses are also fun to renovate because you have the space to really get creative. But if you’re just starting out in the flipping business, it’s better to have the training wheels that a small property allows. Renovations on larger properties are costly and time-consuming. A lot can go wrong, and you can find yourself in over your head. Think about how much time you want to spend on the project and how big of a construction crew you want to hire, as well.
Choose the Right Amount of Upgrades
It’s exciting to take a run-down house and bring a new life into it. But it’s important not to go overboard with upgrades and renovations. While granite countertops, hardwood floors, fancy fixtures, and other bells and whistles can increase the value of the property, you also have to consider the other properties that are for sale in the area. If the other houses in the neighborhood don’t have all these upgrades, the renovations can backfire. If the property ends up being the most expensive one in the neighborhood, you’ll have a harder time selling it.
Neighborhoods have their own personality. Some are established neighborhoods, others are up-and-coming. Some used to be popular, but have since lost their appeal. If you are new to flipping, look for an up-and-coming neighborhood. The property won’t be as expensive as in an established neighborhood, but you will still be able to find buyers. What’s going on in the neighborhood? Are there a lot of new restaurants popping up? Are they building new apartment complexes? These are signs that the area is growing. If you see a lot of vacant store fronts and store closing signs, it’s likely an area that’s on its way out.
Sign up for a Real Estate Course
While you can try to flip a house without educating yourself first, a lot can go wrong. You want to read everything you can about house flipping, talk to others in the flipping business, and take some real estate courses at a local community college. So much goes into flipping a house. Learning about auctions, the real estate market, and how to work with contractors will help you maximize your profit potential. You can also join real estate Facebook Groups and follow real estate blogs. You’ll find a wealth of knowledge advice this way.
Perform Risk Assessment
Flipping a house comes with inherent risks just like any other investment. The more you know about these risks, the better prepared you will be to mitigate them. One risk that comes with the territory is that there are almost always unexpected costs that arise. You might have to fix something you didn’t know was broken. You could have to deal with contractor delays, permit delays, or material delays. You might need to renovate something you didn’t budget for. Another possible risks is taxes. Something the city taxes when you start a project are different by the time you finish the project. Sometimes, you overestimate the strength of the market and the property takes longer to sell than you anticipated. All these little things can add up.
Because there are so many surprises that usually come up, it makes planning all the more important. You will want to create a timeline and a strict budget. You will want to talk to contractors and subcontractors, and even architects and engineers if need be. You want to understand the whole process completely before you make your plans. Find out what permits you will need, what renovations you will have to do, and break it down into projects. Flipping a house is a lot of work, but if you plan carefully and try to predict obstacle ahead of time, you can keep to your budget and timeline and turn a profit.