Top Tips For Your First Flip
Are you interested in getting started flipping houses? I’ve been flipping homes for awhile now and I’ve made mistakes along the way and I’ve learned from them too! If you want to start flipping homes, here are my top tips for your first flip.
1. Get Educated
You can’t find a cheap house online, buy it, and then sell it for a profit. If flipping were that easy, we’d all be real estate billionaires. You must educate yourself before you even start looking at homes. What do you need to know?
- Understand the ins and outs of your local real estate market. Where do people want to live, right now? What kind of house do people want to buy, right now? Don’t speculate about up and coming neighborhoods. Remember, you want this house sold fast.
- Become an expert on home financing options. Will you buy a house with cash? Will you apply for a home mortgage loan? Make sure you understand the ins and outs of home financing before you apply for a loan, or make an offer on a house.
- Don’t avoid the tough questions as you enter the house flipping process. Analyze how much house you can afford, and how much you can afford to lose on any deal.
- Learn how to negotiate effectively. The less money you invest into a house, the more money you can earn during the flip. You also need good negotiation strategies, to haggle with contractors and other workers.
- Know how to spot a good deal. Research landscaping, plumbing, and electrician rates. Find out how much it costs, on average, to recarpet a 1,000 square foot home. You need to know these details to ensure you get the best deals possible.
- Network extensively, and talk to potential buyers before you even start looking for an investment house to flip. Do whatever you can to build relationships with future buyers. If you have a buyer lined up when you purchase an investment home, the house sells as soon as the updates are completed.
- Start building a network of contractors you trust, including plumbers, electricians, and landscapers. You will need one or all of these services when you buy your home. Using professionals you trust saves you a lot of headaches, and money, down the road.
- Know which home improvements increase the home’s value. Focus on these projects first. Home improvements that increase the value of a home might include upgrading kitchen appliances, repainting the home’s exteriors, installing additional closet storage space, upgrading the deck, and adding green energy technologies.
2. Find a Mentor
If you know a successful house flipper, ask him to be your mentor. You might even want to consider offering him an incentive to mentor you. For example, in exchange for his hard-won knowledge and advice, you give him a small percentage of your first profit. This way, the mentor is motivated to tutor you, and you ensure the quality of your education. Offering a financial incentive also enables you to approach experts you don’t know personally, since they will be compensated for their efforts.
4. Make an Offer
Once you find a home you like, you make an offer on the home. If it’s a great house selling for a low price, you might have competition. Many people flip houses full-time, and they will likely know about this house too. You can sneak by the competition by targeting a neighborhood, and going door-to-door, making offers.
Before you make an offer, make sure you know the uppermost price you can pay for a house, and still make a profit. This includes your estimate for repairs, interest, and taxes. Remember to pad your estimate by 20%. If the homeowner or bank won’t sell to you for this price, walk away. It’s better to keep looking, than to risk going broke from a bad investment.
5. Get Working
Make sure you know which home improvement projects you can complete quickly and successfully, and which projects will need contractors.
You need permits before you start remodeling. Not having the right permits, or not correctly displaying permits, can cause serious delays, and fines, from city inspectors. Make sure to apply for permits as soon as the sale is final. It’s also helpful to make a timeline for projects, with associated deadlines, and the budget listed for each project. This helps you, and your contractors, get renovations done quickly, and within budget.
6. Relist and Sell
Many flippers end up listing their homes with a Realtor. Realtors eat and sleep real estate, have access to buyers, and can list your house in the MLS database. They also know the current market fluctuations, and have the skills and network to get you the best price quickly.
You can also choose to sell your house yourself, without a Realtor. You’ll save money in Realtor fees, but in an uncertain market, you might end up waiting a long time for the house to sell. In addition, listing and showing a house takes time. If you can’t be available every time someone wants to see the house, and you don’t want to host open houses, working with a Realtor might be the best choice for you.
Final Word
Without a doubt, flipping homes offer great risks, and great rewards. A house flipper must be prepared for the possibility that the home won’t sell right away. House flippers also have to make tough decisions, like whether to accept an offer that is less than they wanted, but still for a profit. If you can handle all of the ups and downs, and you have an enthusiasm for fixing up and selling homes, then house flipping might be right for you. If you are interested in joining me in flipping houses in Long Island, click here for more information.
Have you ever flipped a house? If so, was the profit you earned worth the process and the experience? What upgrades and renovations did you make to the house?