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Flipping a property is not easy, and successfully doing so means being mindful of a number of details throughout the process
Everyone perhaps has seen American television shows where each episode starts with the host visiting a homeowner and touring the latter’s seemingly substandard living space. Then through the course of the hour-long episode, the host’s team renovates the house so seamlessly, much to the owner’s delight.
Despite such shows making it look simple, successful property flipping is not as easy as it seems, and the endeavor always requires a great deal of planning, work, and assistance from professionals. Like any investment, flipping properties also poses a significant amount of financial risk, making it essential to be concise with its every step.
Q: How Do I Successfully Flip a Property?
A: There is more to flipping a property than looking for an affordable real estate, buying it, then renovating it enough to sell for a significant profit. Being nuanced throughout the process is the key to ensuring little to no time, money, or resource is wasted in the process.
1. First Understand That It Will Take a Village
To be a successful home flipper is to have a great deal of connections, particularly trusted friends who are contractors, real estate agents, home inspectors, utilities specialists, accountants, lawyers, and the like. While you may have bought, improved, and sold your own home, that experience is still completely different from flipping a property, at least when looked at from a business perspective.
The help of real estate professionals will help you with the buying and selling of the flipped property, as well as give you a great deal of insight in the market. Having an accountant, on the other hand, will help keep your budget in check. It goes without saying that building professionals will handle the actual flipping of the property, while a legal expert will ensure everything done is within the right parameters.
2. Consider the Location
Like in other types of real estate investments, the mantra in property flipping is “location, location, location.” No matter how good the deal you make for the property on the buying end, if its location or market is not a good one, you probably will not make a lot of money on it. Like you would when choosing your own home, consider properties near good schools and shopping areas, have convenient access to local transport hubs, and in a safe and secure neighborhood.
3. Research the Market
Doing your research on current and future trends will let you know which properties are best to gamble on and buy for flipping. Some of the basics you should look into include the average prices of properties like the one you are flipping, which areas are selling the most, and what types, sizes, and designs are currently in demand.
4. Know Who You Will Be Flipping the Property for
Researching about the area where the property is will also give you an idea of the potential buyers you are flipping it for. If it is near a school, you will likely be selling it to young families with children. Remember, the successful sale of the property you flip does not depend on what you like, but what your target market likes, so it is important to rehabilitate the space accordingly.
5. Estimate the Flipping Cost and Selling Price for a Property Before Buying
In line with your research of the market, also look into how much it will cost to flip a particular property, as well as an informed estimate of how much it can sell afterward. By doing so, you have a good idea of how much potential revenue you will make off the project, and increase by negotiating a lower price for the property, or avoid buying it if the benefit is little to none.
6. Find the Right Fixes and Stick to Your Budget
You would also be better served by finding real estate that is easy to repair or rehabilitate. A home in need of a fresh coat of paint is obviously cheap and easy to update; on the other hand, a place with mold, outdated wires, and leaky pipes would require significant time and resources to update and sell.
Make sure which updates and repairs you can afford, and when making an estimate, always add 20 percent to the total. Why? Because experts say a house flip always costs more than one thinks. Once you have determined the needed fixes to make and have established a budget, stick to it, and remember that going beyond it or even the 20 percent cushion takes away from your revenue from the sale.
Note: Although careful research has been done in order to come up with this article, Lamudi recommends consulting and seeking the assistance of professionals.
Main image via Shutterstock
