Flipping houses could be both risky and rewarding. Most recently by T.V. shows and advertisements, house flipping has been glamorized as the “Get Rich Fast” way to financial fulfillment. Yet, reality it is a lot harder than those shows or ads make it to be. It takes a team of experts in their dedicated fields to make something such as house flipping successful. You as a potential house flipper must do your due diligence and have an experienced Team working with you to make a handsome profit. Even then, there is no guarantee.
Here are a few Tips we learned over the years.
The money is made buying right
Your Profit gets made buying the right property in the right location. Spend your time and energy in this area. You need to do your research on the area, transportation, entertainment, schools and anything that can add to your purchase so that it is more likely to be in high demand once you post your For Sale sign. Inspections are very important as well. Inspections can give you an estimate for how much work will need to be done prior to flipping. The more updates the better. The potential buyer will be highly pleased with the property if the buyer knows that recent updates have been done along with the remodel.
Be time efficient
Flipping houses is like Day Trading the market. You need to be in and out as quickly as possible. Though some feel houses could appreciate in value, and that is true if you are a long term investor, however if you are flipping you can’t risk that. The ideal length of time is 90 – 120 Days. The length time can vary depending on how many people you have on the job and how effective they are when working. Make sure you have a great team.
Focus on homes with minimum Mechanical damage
To meet the previous tip, stay away “especially if you are new at this”, from houses that will need major mechanical and structural work. Those homes could have massive potential, yet they carry greater risks. Focus on homes with lower cost improvements and more cosmetic work.
Understand and minimize risk factors
House flipping is an active investment. Many factors could contribute to the process. City Zoning, New codes, delays in construction, unexpected repairs etc. Have Plan B for all those making sure you have access to extra money through self-fund, line of credit, or private lenders. Have strategies if the sale will take longer than you originally expected.
Know your construction and hold cost
You need to understand the numbers. One of them is to calculate the total fix cost. This could be challenging if you don’t have a steady Contractor working with you. Also take into consideration your expenses holding the property such as Property Tax, Insurance, permits and designs, HOA, interest, commission and so on.
Plan your renovation carefully
If you ask any experienced project manager they will tell you how important it is spending that extra time in the beginning planning the whole job. There is no shortcuts here. Map out all the work according to a strict schedule. Know when and where you need to order material or follow up on inspections, how to coordinate the different trades, and have a backup plan if things are delayed.
Price the house right and use an experienced agent
Selling the house right is an Art. Work with an agent that will know how to market the property, how to recommend and work with a professional stagger (at times, the agent is willing to compensate you for this), how to price it correctly and have the latest marketing tools.
In Conclusion: Flip or a Flop?
House flipping could be rewarding if you have the experience and the know-how, as well as working with a team that will support you. If you have any questions please feel free to contact us any time. We have an extensive experience in this area as well as the resources that you might need. please contact the MRES Team at (650) 745-8186 or email us firstname.lastname@example.org