How to Successfully Flip a House
Feeling inspired by those home renovation shows to give properties a makeover and sell them for more? If so, here is everything you need to know to successfully flip a house for a profit.
What you should know when flipping a property.
Here are some general tips for you to start successfully flipping homes:
Time Is Money. You will want to renovate homes and find buyers quickly, so you can move onto the next project. Consider that you are working on a project payment basis. The more projects you complete in a year, the more you will be paid. Of course, you could argue that by waiting for those sellers willing to pay higher prices, you can earn more. My recommendation is that you work out the numbers and if that really does hold true then go for it, otherwise you will want to complete as many deals as possible letting volume win over margin.
Build a Realtor Network. You will be doing yourself a huge favor by having a network of Realtors to work with. These individuals live, breathe and eat real estate, which means they will always know what’s happening with the market and any newly listed properties that emerge.
Hire Professionals. Unless you are confident in your renovation skills, we recommend finding professionals to help you. This is especially true for certain renovations that require special licenses or very technical skills. Of course this will be more expensive upfront compared to doing the repairs yourself, but can save you unexpected expenses down the road. Think about what it would cost if you tried to do it yourself but then required a professional to fix your work. This will just add to the costs and duration of the project if something has to be replaced or repaired a second time.
What kind of properties should I look for when flipping?
To find the best deals for your investing purposes, keep an eye out for the following:
Foreclosed properties offer some of the best value for your money out there. Banks just want to liquidate these assets, leaving more bargaining power for the buyers.
Avoid homes with structural damage, as this is much more expensive than cosmetic repairs. This can be solved by hiring an inspector to help you avoid any later surprises.
Homes that require inexpensive repairs compared to the value they add to the home. This is especially true for any apparent eyesores you notice when viewing a property.
One final hint, bathrooms and kitchens are expensive to renovate and take longer, although they can add more value relative to the investment compared to other repairs.
To learn more about exactly which parts of the home to renovate, you can refer to our article,
How to Increase Your Property Value.
After all is said and done, how can I sell my property?
You will want to carefully balance the need to sell your flipped property for maximum value with the need to sell it fairly quickly. Consider this:
The longer a property is on the market, the more people will expect its price to drop. That being said, do not introduce the property too early on the market until it is completely ready to be sold.
Ensure the person buying is able to afford the mortgage. This will avoid wasting time on unqualified buyers that will prolong the sales process.
Remember, the volume of projects is just as important as the margin on each project. Don’t get caught up trying to get the highest price and end up sacrificing new opportunities.
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