What are the things not to overlook when flipping a house?
Flipping is one of the great strategies in real estate investing. It is very profitable and fast. Most investors though are not focused on this strategy because it depends on each person. There are things to know before to start flipping. As mentioned in the beginning. It is great for wealth creation for cash producing projects. When this is done consistently and correctly, you will be ahead of the game. The importance of educating and committing yourself in flipping houses will bring you success faster. In this article, this is to educate and list the things that are vitally important in this business. This will serve as an educational tool or a reference tool to help investors on the flipping process.
The First and foremost that should not be overlooked is the numbers. The money comes from here at the end of the project. Make sure that you understand the numbers to determine the costs and the expected profit.
The project needs money before to start the project as we all know. The are different strategies to do to raise money for your flip. It could be cash, savings, financing from the banks, home equity line of credit, Hard money lenders, joint ventures, or combination of all these. It is easier to have financing ready and a plan to finish the project faster. Speed is the key.
Every area has a different economic activity even though it is just in one city. It is important to do the research to identify whether the area is a good place to flip or not. Are the properties selling fast? Are you in the right price? Did the numbers work for you in this area?
Finding a property
Find a WHOLESALER. Wholesalers are great resource of good leads. They do the initial process and they do their marketing on looking the good leads that most investors are waiting for. It is beneficial to have connections and build relationships with wholesalers. Wholesalers will write offers and bring you all the information with comparables, total costs of renovations, etc. GOOD DEALS ARE ON PRIVATE DEALS. You become the insider.
This is a part of the due diligence process and it is important. This part of the process should not be taken for granted at all. The first rule when analyzing leads is “make money on the buy”. If you see a property that is priced at retail market value, then right on you know you did not make any money because that’s the market. Numbers should be focused on here and then look at properties in that area of what’s the trend to make the flip successful.
Making an offer
In making an offer, this is where the start of the process. As an investor, it is important to get in touch with your lawyer or real estate agent to ask questions on how to put properties under contract. There are clauses and conditions to include to protect yourself from anything to make sure you don’t miss out anything because if there is you will be liable for it. When putting conditions, these are the most common conditions put on the contract: inspection, financing, appraisal (when bank financing). The fewer conditions the greater the chance; however, putting lesser conditions is only recommended for sophisticated investors as it provokes greater risk.
Flipping is of course you should renovate the house. Now, it depends on your preference whether you do it yourself or hire a handyman to do the work. When working with contractors, make sure that you connect to a reliable contractor in the city. Choosing a contractor depends on your goals and budget as there are different types. The cheapest ones won’t always be the best. Pick the most reasonable, reliable, and affordable contractor that fits within your criteria.
Staging helps your flipped home sell much faster. It adds that intuition that the property is livable.
Get a realtor for listing
Getting a realtor for your flipped home adds exposure to the market. Consumers will usually love it and the realtors will just do the work for you for the show homes. This should be added to your cost in the beginning.
– Blake P.