Thanks to a wide variety of TV shows on the subject, a lot of people think that flipping a house is pretty easy. However, those that actually do it know that that’s rarely, if ever, the case.
For those looking to get into it or that already have and are looking to make the most of it, all of your hard work and investment means that the main thing that you want is to make as much of a profit as possible.
Unfortunately, due to unforeseen expenses like excessive junk removal, hidden foundation issues, and plumbing or electrical problems, that’s not possible with every flip. In fact, sometimes you barely break even and of course, there’s always the chance that you’ll actually lose money.
The whole point of flipping houses is to stay away from long-term mortgages and sell the newly-renovated house as quickly as possible. That being said, we wanted to share some tips that could possibly help you get the most out of your flip.
Never Buy Sight-Unseen
Making an impulsive purchase or deciding to “take a chance” and buy the property sight-unseen can put you at serious risk. You need to fully inspect the property so that you can properly assess its condition and create a detailed and accurate budget plan before visiting hard money lenders Fort Worth.
Factor In Contingency Funds
As mentioned above, there’s always the chance that there will be unexpected issues that you have to address. Always leave a little buffer in your budget in case there are issues that need to be addressed that weren’t initially considered. Having a buffer also allows you to cover any little things you forgot to put in your financial budget originally.
Know Your Target Audience
Who is going to buy this property from you? You may be the best of the best when it comes to the art of display, but if you have no idea who your end-user is, it could all be for naught. After all, tech workers in Seattle will likely have different wants and needs than retail employees in Columbus. Knowing your target audience will help you create a product that you know has a better chance of selling.
Have a Contingency Plan
When renovating a home you intend to flip, there are a few things that are out of your control that can completely change your plans. A shifting real estate market, a downturn in the economy, or a change in financing rules could mean that you aren’t able to sell it for as much as you thought you would.
If that happens, you should have a plan in place to either rent out the property, turn it into an Airbnb in the interim, or hold onto it until conditions are more favorable for sale as opposed to just taking a loss.
The biggest thing to consider is whether you’re still going to have the chance to make a profit at some point in the near future, even if you run into any of the challenges above. If you think you can still make a profit at some point, then it’s probably a good investment.
Don’t Rely on Realtors or Zillow/Redfin
You’re not going to find an amazing flip deal with an MLS (multiple listing service) or sites such as Zillow or Redfin that are “MLS-tethered.” Even if there were great flip opportunities listed there, chances are good that somebody else would have snagged it up as soon as it was posted.
Furthermore, while a realtor can be a good source for possible opportunities, one of the best ways is to work with a wholesaler. These are companies or individuals that find properties that need repairs and they purchase them at 40-60% of the “after repair value” (ARV). Search for ‘We Buy Houses Sacramento’—or whatever city you live in—to find these types of companies and then request to be put on their cash buyer list.
Flipping houses is an art form of sorts and in order to have as many “masterpieces” as possible, you need to have a solid plan in place. While the above won’t guarantee that you’ll make a large profit, implementing the ideas can help ensure that you’re as successful as possible.