If you are looking to get into house flipping, here 9 tips to help you get started.
1. Pick and choose your target
Make sure you research the real estate market you plan to invest in. Does it have a high population growth? What types of houses are being bought in the area? Is it close to a college or a good school? Don’t worry about up-and-coming areas; you want to focus on the neighborhoods that are already established so that you can sell your home fast.
2. Set your budget
Find out how much you are willing to invest. Whether you get that number from a fix and flip loans, traditional mortgage loan or hard money loans from Source Capital, use that funding to determine what kind of a house you are able to afford.
There is a rule in house flipping called the 70% rule, which means that you don’t pay more than 70% of the after repair value (ARV) of a home. For example, if a home’s ARV is $250,000 and it needs $40,000 in repairs, you shouldn’t pay more than $135,000 for that home. This rule will help you avoid overpaying.
3. Find your listings
You will typically want to buy foreclosures when flipping. You can find a lot of good bargains in decent neighborhoods. After finding a potential property to buy, get all the information you need through BuildFax. This report can tell you about the home’s history and any repairs, remodels, and renovations it’s had.
4. Learn how to negotiate
If you can spend less money on buying a home, that means you can make more money when it’s time to sell. Some good negotiation strategies include making a budget and sticking to it, pointing out defects in the home you are buying, acting confident, and having the willingness to walk away from a deal.
5. Get familiar with renovation costs
You should start to learn how much common renovation projects are expected to cost. This way, you can walk into a home and start to estimate how much that renovation is going to cost and whether it is worth buying or not. Plus, you’ll save time and money.
6. DIY
During the renovation process, help with the work because it will give you a good guess on how much a project should cost. You’ll also find which parts of the job you enjoy and which ones you don’t. Doing your own DIY projects can save a significant amount of money in the long run. You are likely to accumulate a significant amount of waste during the process, but there are many services that offer dumpster rental to help you dispose of this waste.
7. Hire a contractor For all the other projects that you can’t do yourself, you will need to hire a good contractor. Some things to evaluate when hiring a contractor include:
● Punctuality
● Quality of references
● Time management
● Organization
A network of good contractors is worth its weight in gold.
8. Figure out your timeline
A good timeline for flipping a home is 3 months. It may take longer than that, but that is money wasted. A good contractor can make sure that your renovation sticks to the timeline you set out without requiring your presence on-site.
9. Know how to sell
Decide if you want to go with a real estate agent or sell yourself. If you go with an agent, they will issue realtor fees. If you sell it yourself, you may save money, but it will probably take you longer. You will also have to be available for property viewings, which is a waste of time for you.
Flipping houses can be a risky but lucrative business. If you are able to keep this advice in mind, then you will be in a better place than if you had gone in blind. Make sure you are financially and mentally ready to invest in house flipping if this is the path you want to take. Good Luck!
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