5 Things You Must Do to Be a Successful Flipper
So – you want to be a house flipper? While you have probably seen the shows on television where investors are flipping homes left and right for a large profit, it isn’t as easy as you might think. Making a wrong move could end up costing you in terms of time and profit. If you are looking to break into the house flipping business, here are a few tips to help you along the way.
- Look for a home that has potential.
While consumers are usually shopping for the house that needs the least amount of work, successful house flippers look for the house with the highest potential. If you buy a property that is already the nicest on the block, what additional value can you expect to receive as a flipper? For this reason, successful flippers look for the ugliest house on the block because they have the most potential.
Often times, people overlook homes simply because the kitchen is a little outdated or the bathroom isn’t set up in a way that they like. This is where people often go wrong. If you can walk into a distressed property and envision the potential that home has, you can be successful. Just because a home might look a little funny now or have a weird smell, that doesn’t mean there isn’t a way to spruce things up and transform the home into a gem just waiting for someone to come in and make it their own. You have to be able to look past the state the home is in now and think about what it could be and what you could turn the home into.
- Make sure the numbers add up.
If you want to make money in real estate, you make your money going in when you buy the property, not when you sell it. For that reason, when purchasing a an investment property, you are ultimately looking for something that is going to make you money in the long run. You don’t want to purchase a home for $50,000 and put another $50,000 into it only to have it come out being worth $85,000. You lost $15,000 on the deal, not to mention all of the time and effort you put into fixing the place up. You need the value after repairs to exceed what you are going to put in it combined with what you paid for it. This is the only way you are going to make a profit. If the repairs and total cost of the home are more than what you are going to be able to get out of the property, you need to walk away and look at another property.
The best way to get an idea of what the home might be worth when all is said and done is to look around the neighborhood and see what some of the other properties in the area are going for. Make sure you are comparing a like property. Don’t compare your two-bedroom, one-bathroom home to one that is a three-bedroom, two-bathroom. By spending time going through the different properties in the area and really evaluating what it is that you are dealing with, you can save yourself a lot of stress, money and time.
- Don’t design the property for yourself.
Often many flippers end up going through the home and choosing paint colors, cabinets and accessories that they would want in their own home. This is one of the worst things that you can do when looking to flip a home. Just because you might like vibrant paint colors on the walls, hardwood floors and granite countertops, that doesn’t mean everyone else is going to. Be conservative when choosing paint colors and surrounding accessories for the home. You want something that is more universal in nature that everyone can enjoy. Go with an antique white, lighter brown or black. Neutral colors that blend in with everything else in the home are ideal.
If you were to purchase a higher-end home in an upscale neighborhood, you might want to add in a few extras like crown molding and drawers that don’t slam when you shut them. Think about the area where the home is located when it comes time to choose the features you are going to put in the home. In doing so, you can help the home sell quicker. Buyers love a home that they can walk into and start enjoying right away. When you give them the things that they need and want, you can help turn a profit quicker and draw more people in to the property.
- Make sure you have a team of professionals ready to get to work.
When you purchase a foreclosed home, you can almost guarantee that you are going to be putting money into the home and doing a number of different repairs to get the property back up to where it should be. Because of this, you need professionals who are ready to get to work right away and fix the property up quickly. The quicker you can get the property ready, the quicker you can make a return on your investment. You should have a team of professionals consisting of roofers, plumbers, electricians, HVAC professionals and general contractors. Don’t be afraid to ask for their opinion before you make the final offer on a property, provided you have the opportunity to do so.
- Make sure the house is ready for the market before listing it.
While you might be in a hurry to list the home for sale and make a profit on it, you need to spend some time making sure that the property is actually ready for sale. You don’t want people coming in and making all sorts of requests of you on how to finish the house. Wait until everything is done and in place before having an open house and letting people come through the property. Staging the home with nice furniture can go a long way in making it more aesthetically appealing as well.
Let’s Get Started.
While our list is by no means comprehensive, by going through the tips above, you can make sure your house flipping venture is profitable and stress-free. It all starts by spending ample time going through the options before rushing into any purchasing decision. In doing so, you can enjoy a lot of success in flipping homes.
Are you ready to finance your next home flip? See our alternative documentation loans and our hard money loans loan products. You can also call us to speak to a loan officer direct at 844-574-LOAN (5626), visit our contact page, or apply directly online!