Want to Flip a House? You Must Read these tips to Stay Profitable
Monday Sep 02nd, 2019
Spending an hour watching one of the many house flipping shows on TV or online can be enough to convince anyone to try this quick and easy investment and good way to make thousands of dollars of profit in a short time.
The process looks very easy and anyone can do it. Just buy a cheap old house, spend a little time and money to renovate it, and then resell for thousand more than you paid... right?
But actually, nothing is ever as easy as it looks, and if you now own a house you are trying to flip, you may have already found that this is absolutely true.
Read these tips that will help you avoid mistakes and increase your profit.
Take Time, Watch and Understand your local market
Successful house flipper takes enough time to study his local market, watch for trends & upcoming changes that will influence houses prices and understand the factors that attract home buyers to certain neighborhoods (like low crime areas, good schools, new opportunities for jobs, etc)
He also watches new listings & their time in the market to identify how much time will he needs to sell the flipped house.
Look for Qualified Professional team
Having a reliable, trustable and professional team (or services contractor) helps to avoid extra expenses, excessive risk and delays.
The professional team will increase the profit through minimizing required time to finish the renovation job, as well as, the final finishing will be amazing and attractive for potential buyers.
Beside to professional services team (or contractor), it’s highly recommended to seek out a real estate professional in your area who understands what it takes to successfully flip a home and has a track record to prove it. This type of sales agent will be able to help you understand the market, determine how to make the best possible use of your renovation budget and what needs to be done to attract the most qualified buyers when the home is ready for the market.
Learn how to know if a house is Flippable
Before starting house flipping investment, it's important to understand what makes a house a viable investment for flipping. Any home can be renovated, but for it to have appeal to buyers, and for it not to run too much money for the flipper, certain elements must be in place.
Location is perhaps one of the most important specifications when picking a home to flip. Certain neighborhoods are valued more highly than others, and some neighborhoods are located near good schools, work locations, entertainment, and other prime visiting spots that buyers would be willing to pay for proximity to.
When buying a home to flip, oftentimes it's expected that the home will be a fixer-upper. But if it's too much of a fixer-upper, it may be impossible to recoup the money sunk into renovating it at the time of sale. Structural damages are often far too expensive of repairs for flippers to take on, and instead, people who want to flip houses should focus on homes that only need cosmetic repair instead.
The price of a home typically cannot increase past the price of homes in the existing neighborhood. When buying a home, flippers should be sure that they are purchasing it below the market value, so that the renovations will bring it up to the value of the neighborhood while still enabling them to turn a profit. If the cost is too high, the flipper may not make any money on the house, or even lose money.
It's important when learning how to flip a house to understand these principles before purchasing.
Renovate for Buyers NOT for you
A mistake often made by new house flippers is to renovate the home to their personal tastes. To flip a home successfully, it is imperative that you understand who your buyer is most likely to be and what housing features and amenities are most valuable to their lifestyles.
For example, if the home is likely to be sold to a household of one or two people, a larger master bedroom and bath and a second bedroom that can be used for guests or an office may sell better than a home with three smaller bedrooms. However, if the neighborhood is predominantly made up of larger households of four or five people, having the third bedroom becomes a major selling point.
To get a good understanding of who your most likely buyer prospects will be, based on the location of the home, ask your real estate professional to help you analyze the local market and decide what type of features and improvements to include and which ones to avoid.
Keep on track (on Budget, on Time and on the Plan)
The fourth key to successfully flipping a home is a very important one - the need to stay on budget and stick closely to both the time frame and plan for renovations and marketing. Failing to do any of the these will end up reducing your opportunity to earn expected profits on the sale of the home.
If something unknown arises that must be dealt with, such as finding a latent defect that must be corrected during the renovation but was not in the plan or budget, look for ways to reduce other costs in order to pay for the repair without exceeding your initial budget. Since delays could mean missing your expected completion date and losing prime marketing time, you may need to also look for ways to fit unexpected repairs into the planned timeframe in order to minimize lost profits, such as scheduling some work on the home to be done after normal business hours or on the weekend.
Price to the Market, Not to Your Needs or Expectations
Successful house flippers do not want to build an inventory of completed homes waiting to be sold. Unsold homes are subject to the market fluctuations that can erase potential profit margins overnight. To become successful as a house flipper, you will want and need the homes you renovate to sell as quickly as possible. Doing this means pricing them accurately based on the most current local market information, which is not always the same as the flipper's needs or expectations.
To correctly price a home that will be flipped, sellers need to create a detailed budget and time frame for the entire project before beginning any work. Their real estate professional can use this information along with an in-depth comparative market analysis and sales projections based on historical trends for the area to help the seller price the home as accurately as possible to attract maximum interest from qualified buyers and sell the home as quickly as possible.
You can minimize the risk factors by working with skilled professional in finding the property – and preparing it to reenter the market. Working with highly qualified realtor who has a track record of successful house flipping projects, is the best & easiest way to minimize the risk of investment. Don’t hesitate to contact me for consultation.