While many people have very specific dreams of enjoying the bountiful
profits that can be made from flipping houses very few people put too
terribly much thought into the process or any formulas that might be
pertinent to success when it comes to flipping houses as a real estate
investment venture or for the sake of building a nice comfortable
lifestyle or retirement. You will hear a lot about the things not to do
when it comes to flipping houses but very few people take the time to
mention the things you absolutely must do in order to successfully flip
a house and thus begin your ride on the road to real estate investment
riches.
1) Do put everything to pen and paper and arrange it out carefully
before you begin. If you are getting into this to make money you need to
treat it like a business. This means you need to have a plan of action
and make every effort to work towards carrying out that plan.
2) Do determine a budget for the complete project. You need to have a
plan for how much money you are willing to invest in the property
itself, how much for renovations, and how much money you need to make in
order to be a worthy investment for your time and labor. A house flip is
a lot of work in order to pull it off successfully. You want to have a
good idea of how much homes in the neighborhood are worth, the value of
your property as is and the estimated value of the property once
improvements are made. In addition you should also have a pretty firm
grasp of the costs involved in making the repairs in order to create a
realistic budget for the entire project.
3) Do have an inspection. This is the single most important detail that
can save you a great amount of time, money, and heartache when
everything is said and done. Be prepared to walk away if the inspection
determines that there is more work needing to be done than simple
cosmetic repairs. You want to make changes that people can see because
those are generally the changes that drive up the cost of the house. You
want to avoid needing to make changes and improvements that aren't
visible but are very necessary. If you need to invest a lot of money and
labor into the house you need to seriously consider the realistic profit
potential the property offers. If it isn't significant then you need to
walk away before the property becomes a real estate investment money
pit.
4) Do become familiar with the neighborhood and plan your flip according
to the needs of the area instead of your personal tastes and needs in a
home. This is another thing that many first time flippers forget. This
is not a personal project it is a business project and you need to treat
it as such. Keep costs down and personal feelings out.
5) Do remember that you are in the market to make money not waste money
when it comes to determining an asking price for the property. You've
poured blood, sweat, and probably more than a few tears into your flip
but you cannot set the value of the property by the effort you've placed
into it. Have practical expectations of how much you stand to earn from
your efforts and how much you are willing to go down on the price in
order to walk away with some profit in your pocket.
You should also take a moment to consider upon the fact that many first
time flippers actually lose money on their first flip. If you turn a
profit at all, even a small profit you have learned many priceless
lessons that you can carry with you into future flips and make more
money. More importantly the lessons you learn from your first flip are
lessons that money really cannot buy so it is worth a lower profit or
even taking a slight hit if your experience makes you even more money in
the future as you continue along your real estate investment path.
Return to Brokerforyou's real estate articles