House flipping has become a new age phenomenon. With television shows galore, showing the money-making potential and beautiful results, it is easy for do it yourselfers to want to jump in on their own project. While flipping houses can be rewarding, it is crucial to be aware of amateur mistakes that can turn your project into a nightmare.
Don’t Bite off More Than You Can Chew
Start small. If you are new to house flipping, it is safest to invest in a single-family home with repairs totaling less than $50,000. This gets your feet wet, while minimizing risk.
Be Selective with What You Remodel
Investing precious dollars into the wrong things can create a disaster. Make sure to research comparable properties and what constitutes a great selling point. The ultimate goal is resale with a profit.
Engage in Careful Planning
Organization and preparedness are the key ingredients to being successful in a variety of ventures. Plan your budget in advance. Make sure to research and secure funds. Have a plan of when the project must be done, how long it will take, and how you will execute the work.
Location, Location, Location
When investing, research areas that are showing promise in growth and wealth. The ultimate flip is one that is purchased for a low price and resold with growing market values.
Find the Right Lender
Finding financing for investment properties can be a challenge. The wrong lender can lead to drudgery when obtaining financing. Research which lenders work with house flippers. Ideally you want financing that requires a low-down payment, short application process, and a quick turnaround.
Don’t Skip on the Inspection
While spending money upfront to obtain an inspection may seem undesirable, it will pay for itself in the end. Inspections will reveal the true condition of a property and save you any unpleasant surprises later.
Structure is Key
While a flip house is going to need repairs and updates, it is important to buy a property that is structurally sound. Buying a house with major foundation damage is a losing proposition as it will require major repairs equaling both time and money.
Sell Your Property for Less
This is an important marketing strategy. Selling flip houses for slightly less, typically around 2% below market value, will help get the house off your hands. Since it is an investment, it is imperative that you can move it quickly. Additionally, the lower price may encourage a bid war between parties and drive the price up.