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 property 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 make a fortune out of it.
Let’s examine some of the Dos when flipping is one of your investment strategies:
- Do put everything to pen and paper and plan it out carefully before you begin. If you are going to enter into this to make profits you need to treat it like a business. This means that you need to have a plan of action and make every effort to work towards carrying out that plan.
- Do establish a budget for the entire investment. You need to have a plan for how much money you are willing to invest in the property itself, how much for renovations, your holding power, other costs such as stamp duty, MOT etc and how much money you need to make in order to be a worthy investment for your time and labour. A house flip is a lot of work in order to pull it off successfully. You need to have a good idea of the value of the properties in the neighbourhood are how much are they worth, you too need to know the value of your property and the estimated value once the project completed/ renovated (for subsale). In addition, you should also have a pretty firm grasp of the costs involved in making the repairs/ renovation particularly for subsale property in order to create a realistic budget for the entire investment. The goal in property flipping is to get in and out quickly and spend as little money as possible in order to make as much money as possible.
Don’t spend money you don’t need to spend. While it would be great to put in granite countertops and gourmet kitchens into every home it isn’t always practical and this is often money that will not be recovered, particularly in homes that are in marginal neighbourhoods. If you want to get the most for your money avoid costly expenses that aren’t exactly necessary for the successful completion of the flip. Resurface bathroom fixtures rather than replacing them if possible and use new cabinet doors or hardware rather than adding new cabinets all together to cut down on expenses. In other words, salvage what you can, fix what needs to be fixed, and add a few cosmetic touches before moving on.
If you want to learn more on “How to get the Property Fundamentals right from the start through 2 Key Strategies for 2016: KEEP strategy and FLIP strategy “, click here
- Do have an inspection. This is the single most important detail that can save you a great deal 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 labour 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.
- Do know the neighbourhood and plan your flip according to the needs of the area rather than 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 feelings out.
- Do remember that you are in the market to make money not waste money when it comes to establishing an asking price for the property. Have realistic 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.
- Don’t neglect the exterior. Curb appeal is what brings buyers into the property. A homebuyer is in the market for the entire package. A home that looks run down on the outside leaves the impression of being neglected on the inside and many potential buyers will never walk inside if the outside looks forlorn.
You should also take a moment to reflect 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 valuable 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.