House flipping can be highly profitable but can also be extremely daunting and risky at the same time. The venture can become even more challenging, particularly when you do not understand what exactly you are doing. House flipping is utterly different from the impression that TV shows portray nowadays. To help make the process successful for you, here are ten tips for being a successful house flipper.
- Always have the property inspected
When you are new to construction, there are high chances that you may miss major defects within a property such as inadequate wiring , some faults in the foundation, weak roofs or even mould infested shacks. Never invest in a property before seeing it personally and having it inspected by a professional. Many house flippers have told harrowing stories of buying houses that looked beautiful online only to significant defects in the property later on. A professional house inspector will surely help you determine how much work you need to do, and if you can complete and remain within your budget.
- Hire a realtor
This is an essential tip that most house flippers do not take into consideration. Although apps like Zillow and Trulia make you feel that you are an expert house flipper, you can never overlook the importance of working with a realtor in your project. A real estate agent will guide you efficiently throughout the entire process of buying and selling the property-, you may be surprised that they can help you sell the house in a few days. Realtors have extensive knowledge about market conditions, can help you negotiate the prices and even make comparable sales.
- Do not improve too much
In most instances, when you invest in a property that in disarray, you may be tempted to overdo the renovation, so it becomes the most appealing one in the neighborhood. For instance, when you invest in a home located in a neighborhood, there is no need for renovating it with high-end marble flooring, expensive kitchen appliances and top-rated hardwood floors. When you over improve the property, you will have to overprice it so you can make profits. Most buyers usually stay away from overpriced properties since it is an indication that they may never recoup the investment in the future when they plan to sell it. Instead, perform essential repairs and include basic finishes within the fixer-upper.
- Manage your team
Before diving right into the project, it is vital to have a team of experts before embarking on the highly complex endeavor. This refers to architects, contractors, cost accountants, electricians, plumbers, as well as other field experts who you will work closely with you. However, as much as you work with these professionals, remember you are in control of the whole project. Ask for references to assess their previous work deeply. Before you start working with any professional, have them sign a legally binding contract that effectively stipulates the relationship terms to avoid future problems when the project has already kicked off.
- Know your market
An important tip for successful house flipping is to get to know your market. Who exactly are your potential buyers? What is the property’s potential value? This gives you an overall idea of exactly how much they may be willing to spend, and you can fix your renovations following their budget. For example, if the area where your potential buyers are have many children when you buy a house with only one bathroom, it is wise to add a second one to suit their needs of a big family. Knowing your market is one of the best ideas to ensure you maximize your profits when flipping houses.
- Go for the right neighborhood
Most house flippers tend to assume that an inexpensive property anywhere is always a great choice. Well, the truth is that the location you choose can make your house flip successful or turn it into the most horrible experience. Ensure that you invest in a property located in the right neighborhood. Look out for good schools, the level of crime, shopping facilities such as malls, functional transport networks and closeness to major attractions. You can research some of the prime neighborhoods or talk to a real estate agent to make a more informed decision.
- Never overprice the property
In most situations, you may be tempted to overprice, especially when you have exceeded your budget. The thing is, you will make the situation even worse when you overprice the home in an attempt to make up for the house flipping mistakes that have already occurred. The high price will surely keep away potential buyers, and you may end up holding it for much longer than expected. This may also translate to increased costs of maintaining the property when it is still in your hands.
- Know your budget
This is one of the most excellent tips to ensure a successful house flipping. Understand the total repair costs, associated costs when holding the property such as insurance and taxes and marketing it. This guarantees that you will not end up overspending on your flipping project. Know how much money you plan to spend and how much you have to borrow from other sources. You may find getting traditional loans a risky affair since they usually come with too much interest rates and may take too long to process.
Ideally, it is wise to consider hard moneylenders. Locate a hard money lender who offers loans to flippers and already have flexible programs to suit them. When you receive the hard cash, you can repay the money as a more considerable sum and share the profits from the sale of the house with the lender. It is also a great idea to borrow from your friends, family and even private investors to help meet your budget requirements. However, consider borrowing from friends and family as a last resort to avoid problems in the future in case the flip does not become profitable.
- Consider the possible options
Sometimes flipping the property in real estate market may take a turn for the worst, and you may end up not selling the house for a long time. When you are hit with such a situation, it is always best to establish the potential holding costs and rent it out when selling it will get you into significant losses. This is a great decision to make as you wait for the markets to become lucrative.
- Do not underestimate landscaping
Most house flippers concentrate on achieving breathtaking interiors and pay less attention to curb appeal. They do not realize that a street view that is not attractive usually scares away potential buyers. Take important actions to make the exteriors of the property look appealing. For instance, try mowing the lawn regularly and building the yard neat.
These house-flipping tips will undoubtedly you successful in your projects. However, much as you may not enjoy instant profits at the beginning, the venture is incredibly rewarding. Try learning as much as you can about house flipping from books, blogs, and even talking with expert house flippers to make the most from your projects. You can also undertake a course or qualification in the area to increase your chances of success.