House flipping can be an amazing way to make a profit, but it is not as simple as you might expect if your previous knowledge of it all comes from TV shows. House flipping takes a lot of work and investment, and there is a lot of planning you will need to do before you can start on such a big project.
Below, you will find our top tips for house flipping, ideal for anyone who is thinking about trying this but has not yet done the research. With some expert guidance, you can set yourself up for success much more reliably.
1: Budget Carefully
One of the biggest mistakes that novice house flippers often make is to budget poorly, which can eat into profits enormously or even lead to making an overall loss. Fixing up a house to flip it, costs money, and budgeting for all those expenses matters.
As a general rule, a house should sell for 30% more than it costs you, including repairs. That means that if you reckon a house should sell for $200,000, you should not be spending more than $140,000 in total on the purchase price and repairs.
2: Understand the Market
Many first-time house flippers make the mistake of failing to research the area their new house is in. If you do not know what comparable houses in the area are selling for, you will not be able to plan your finances properly. In general, fixing up bad houses in good neighborhoods is the best way to make a profit on your investment. Visit the area, get a sense of what it is like, and check the market value of other properties selling in that area.
3: Pay for a Professional Inspection
There is nothing worse than buying a house and discovering a major structural issue that is going to take enormous amounts of time and money to fix. Weak roofs, foundation problems, outdated wiring, and many other problems can strike when you least expect them. It is important to do your research before committing to a purchase of this size, and paying for a professional inspection is the best way to make sure you do not miss any issues that could cause you problems further down the line.
4: Plan your Timeline in Advance
It is important to make sure you give yourself more time than you think you need for a project of this scale. Things are likely to go wrong, and even small delays can add up rapidly, throwing your entire plan off. Plan out how long you think it will take to complete each step of the project, and then add around 25% extra time on top of that for safety!
5: Don’t Do It All Yourself
Do not overstretch yourself. Knowing your limits is an essential part of house flipping, and that means that sometimes you will need to take a step back and call in a professional. Professional contractors are your most important backup for when things go wrong, and it is important to know when to call them in.
6: Plan Your Clean-up In Advance
Building projects and renovations create waste, and you will want to plan out how you are going to get rid of that in advance. If you are on a tight deadline, then you will not want to be panicking about how to dispose of a mountain of trash at the last moment. Hire a dumpster for the entire span of your renovation period, and you can clean up at your own pace, throwing things out as and when you feel the need to clear up.
7: Don’t get carried away!
If this is your first time flipping a house, it is easy to get a bit over-excited and improve the house too much. Be strategic and analytical about your modifications here – you are not going to be living in this space yourself, so focus on practical and necessary improvements rather than on expensive luxuries. If all the houses in the area only have basic kitchens, for example, it probably will not be worth shelling out for marble counters and high-end fittings!
8: Focus on Selling
You are looking to sell your flipped house, and the longer it spends sitting on the market, the more it will cost you in simple maintenance expenses. This means that you need to stay focused on selling at every stage, doing whatever you can to ensure that the house sells as quickly as possible.
Price the house to sell. That is the single most important thing. Beyond that, though, there are a few other things you can do to help your house sell quickly. Potential buyers are going to want to be able to imagine themselves living in the house, so keep it clean and minimalist, with minimal clutter and distraction. Painting in neutral colors is a good way to keep things understated and simple, and the more you can do to keep it clean and simple, the better!
House flipping can be a complex and involved process, but doing a bit of research and prep before you get started can help you to avoid a huge range of problems further down the line. Plan everything out in advance, and get as much advice and guidance as you can from more experienced house flippers, and you will be well on your way to success. House flipping does not have to be as scary as it looks, as long as you make sure you are prepared well in advance!© Copyright 2022. All Right Reserved.