Have you ever watched a television program about flipping property and thought, “That looks fun!” You’re not alone. Flipping houses is fun, and if HGTV is anything to go by, it can also be lucrative. However, as fun and glamorous as it looks on TV, flipping property is a business endeavor and should be treated as such.
There are many things to consider when you enter an investment, and renovating a house is no different. You need to take your time and research the property thoroughly, as well as doing your due diligence. No business venture is without a certain amount of risk, but by ensuring that you make informed decisions and rational decisions, your financial future will be decidedly more successful.
If you think you’ve got what it takes to turn flipping houses into a profit, here are some tips to ensure that you get off to the best start and maximize your return on investment.
Research the Location
There is no glory in having a beautifully renovated home in an undesirable neighborhood. Like the old adage goes, it’s all about location, location, location. If you find a home at the right price in a hot market, it will be a lot easier to flip for a profit than a home in a location with low demand.
You can always refurbish a home and increase its sweat equity, but you can’t alter its location. The best flip opportunities are often in neighborhoods that have local amenities that entice your target market. For example, if your flip is a four bedroom property, you can assume that families will most likely be the target market. In this case, you’ll want to make sure the home is in a good school zone.
It would help if you also tried to find out about any new constructions that may be happening in the area and could affect the value of the home. New hospitals and entertainment options, for example, can make a neighborhood more attractive to potential buyers.
Renovate for the Target Market
One of the biggest mistakes an investor can make is not considering their target market when they renovate a property. Whether they become too emotionally invested in the property, or they simply don’t do enough market research, spending more money on the renovation than you need to does not make good business sense.
Rather than focussing on individuality and personal touches, you should be designing a clean slate for your potential buyers to put their own stamp on. It is essential that buyers can see themselves living and enjoying the home. Stick to neutral color schemes and finishes in order to appeal to the largest pool of buyers possible.
Unless the property is a luxury one in a highly desirable neighborhood, it is not necessary to renovate the property with high-end finishes that you may not be able to recoup back in the sales price. It is important that you research the market and budget accordingly.
Time Is Money
The longer it takes you to sell a renovated property, the more it eats into your profit margin. It is vital that you work out a schedule of time and stick to it as closely as you can. Not only will you avoid having to pay utilities and other expenses for longer than you need to, but you will also prevent any costly maintenance issues that could arise from a property sitting empty.
In order to sell your flip as quickly as possible, it is essential to work with people that you trust and know will do a good job. If you don’t have contractors that you have worked with previously, ask around friends and family for recommendations. It would also be prudent to interview several to get the best price possible for the work.
Likewise, an experienced real estate agent could be worth their weight in gold when it comes to a quick sale. Licensed realtors understand their local market and can market the property effectively to ensure a faster sale.
When it comes to flipping homes, it is crucial that you consider all of your options carefully and treat each one as a business decision. Although you can’t entirely eliminate risk, you can maximize profits if you commit yourself by thoroughly researching all potential properties.