House Flipping Can Pay Off Big Time, If You Do It Right
For decades, house flipping has been a lucrative business for entrepreneurs and go-getters around the world. As with most things in life, when done right, house flipping can seriously pay off. While you won’t get rich overnight, flipping can bring you a steady stream of income.
Though buying and flipping homes is a big-time investment, purchasing the right properties at the right time can make you tons of money. Here’s what you need to know about the ins and outs of real estate investing.
Tips to find success in the house flipping industry
House flipping isn’t a business to get into on a whim. It takes time, effort, and tons of research to get the most bang for your buck. Here are some of the top tips for anyone looking to make it in REI.
1. Be mindful of your budget
Whether you’re a beginner investor or someone who has a little bit of experience, one of the most important things to keep in mind is your budget. Don’t buy a property that isn’t going to bring a decent return on investment.
Be conservative with your budget and leave a buffer for any unexpected things that may come up. Chances are that you will come across small (and possibly large) items that need to be fixed before the property is put on the market.
2. Don’t overpay
One of the biggest mistakes that real estate investors make is paying too much for a property. Getting the wrong value from the get-go likely means that you’ll end up losing money. While it’s much more fun to get your hands dirty with projects, do your due diligence to analyze the numbers to ensure that you’re getting a fair deal.
Spend some time calculating the property’s “after repair value.” Make sure that the difference between this number and the ARV is big enough to cover expenses to flip the property while also ensuring you make a profit.
3. Location is everything
Even if a property has all of the potential in the world, location is a key factor to consider. When searching for a house to flip, make sure that you’re buying in an up-and-coming or a highly respected neighborhood.
If you’re unsure of the market or the area, talk to a real estate professional. What’s nice about flipping in a good area is that these homes are already priced above average selling value. This means that after flipping a home, the property is likely to sell for even more.
4. Seek out undesirable houses
When searching for an investment property, don’t shy away from one that seems (or looks) undesirable. While you always want to buy properties that have a solid structure and foundation, don’t let undesirable features sway you.
Old windows, unkempt lawns, shag carpet, and ugly paint are all easily fixable. At the same time, they also lower the price of the property, which is a huge benefit for investors.
Run away from properties that have major problems such as plumbing issues, foundation issues, or a leaky roof. Fixing these types of issues often comes with a high price tag.
5. Be realistic about renovations
Success in the flipping industry comes down to knowing which renovations are worthwhile and which ones aren’t. Aside from assessing the price and value of a home, you need to know what changes you can make to boost these numbers.
Don’t bother with complex and expensive renovations that will only drain your money. Most flippers can get by with tackling basic projects such as:
A new coat of paint
Installing better windows
Refreshing the flooring
Replacing old appliances
Avoid getting too in the weeds with your renovation projects. Otherwise, you put yourself in the position to lose money when it comes time to sell.
6. Don’t neglect curb appeal
It’s all too easy to forget about a property’s external appearance. When it comes time to list the home, curb appeal is something you’ll want to prioritize. More often than not, curb appeal can make or break a property’s sales price.
Be mindful of the exterior property when completing renovations. Don’t put a dumpster on the front lawn. Encourage use of the garage and/or driveway. It can take months for a lawn to bounce back. Protecting it from the get-go is the best way to keep it looking its best.
You’ll also want to do some simple sprucing up if needed. Potential buyers prioritize how a home looks. Applying fertilizer, fresh mulch, and laying sod goes a long way in boosting a property’s curb appeal.
7. Partner with a quality general contractor
When it comes to saving money on renovations and maximizing your profit, you’ll want to partner with a general contractor in your area. As a real estate investor, chances are that you’ll need the help of experienced contractors who can complete renovations in a timely fashion.
Partnering with a specific contractor is mutually beneficial. You have a team of skilled professionals that you trust, and in turn you can provide long-term steady business that may lead to lowered prices for their services.
If you're a real estate investor in the Chattanooga area, Home RX is the general contractor for you. We have years of experience in the flipping industry and will work alongside you to ensure that things are done the right way.