Read more to learn how to start a house flipping business below.
Flipping houses is a big business in today’s world of real estate investment. That’s not to say that some investors may wonder how is real estate investment when it costs so much?
How is real estate investment compared to stocks? There’s no question you can make big money with both options, but real estate is sustaining over wall street investments.
Wall Street investments carry a much greater chance for loss over real estate. With real estate, you stand a chance to at least break even but more than likely you make good money.
Building a reputation as you go will take you a long way if you flip houses. People will hear about the quality results you produce and they won’t hesitate to purchase a flip home from you. Your reputation is your brand and your work will speak for itself, ethics matter if you expect to make a living.
Having the talent to find properties that offer a large potential profit helps immensely. Some house flippers have made 3 to 4 times their investment back using minimal budgets for cosmetics and curb appeal. There have even been reports of flippers earning 10x their investment buying property for pennies on the dollar at auctions.
Having a good source to find deals on properties can save you money and make you more than a regular house flip. Try software like Bird Dog Bot that helps you find great deals on flips that you otherwise would never know about. This post covers 7 things to consider before you learn how to start a house flipping business, let’s dive right in here.
Many colleges offer very reasonable courses, you can get a property investment diploma for a $29 completed course.
Do What’s Needed
Never cut corners, it never ends well and your name is your reputation. Cutting corners can create situations that possibly put the new owners at personal and or financial risk.
Create a safe home for the family or person that decides to buy your flip house. Taking shortcuts using cheap shoddy workmanship and inferior materials should never be considered.
Keep repair records that can be validated with the new homeowners that show repairs were done correctly by professionals. This can go a long way when selling a flip house, much like a car with an impeccable service record. Service records offer great value to the new prospective buyers and owners that decide to contract a sale with you.
Having a whatever it takes can-do attitude will help you achieve those end goals with your house flipping project. Knowing that every day is a step closer to seeing a profit is a great motivator to keep working towards those goals. Every house flip conditions you for the next one and over time it all becomes a daily routine for you.
Avoid Spending Money
On this topic, don’t spend money creating more work that will result in less profit. You lose money with longer deadlines and more labor-intensive cost involvement, stay streamlined whenever possible.
Many people do this by deciding to tackle additions, rip out walls, add additional plumbing or electricity, or completely changing floor plans. Unless the changes significantly improve the asking price it’s best to leave it to buyers.
Spend the bulk of your budget in kitchens and baths for interiors and curb appeal for the outside of the flip project. Exterior curb appeal can bring in bigger profits, sometimes the least costly improvements have the biggest impact. Some house flips look far worse than reality, you can flip them on a minimal budget and gain top dollar returns.
Check out second-hand resale resources where you can buy almost any building materials for pennies on the dollar. Find second-hand material stores like Habitat For Humanity and sites like eBay and Craigslist for used materials.
If It Ain’t Broke
There’s a lot of wisdom in the old adage saying, “if it ain’t broke don’t fix it”. I can’t see a reason to mess with something that doesn’t need to be fixed. Unless it improves the value of the house and adds profit to your project.
Sometimes it’s necessary to fix something that’s not broke in some cases. Code violations may require bringing things up to code despite something still functioning in working condition.
One must do their due diligence when making a purchase of any house they intend to flip, it could save thousands in expenses and headaches. Some flips only requiring light cosmetic care and curb appeal to make thousands back.
Some people like to take things apart and often they can’t get them back together, steer clear of this type of pitfall. If it’s not already broken don’t fix it. Stick to what you know and outsource things you don’t you’ll do much better.
Plan A Budget
Most investors set a budget when planning a house flip but few manage to keep within that budget. You need to plan for unintended spending on every flip and if that money is not used that’s fantastic.
You need to plan a budget and know the intended profits of the flip house. Stay current on everything with your flip house by keeping good records, receipts, and progress reports for daily viewing.
Items are sometimes left out or forgotten from the house flip budget that may include extra permits, property appraisal, fuel expenses, possible property taxes, property advertising, and unexpected repairs. These items can take from profits and should be included when considering the flip when possible.
Fuel expenses can add up if the flip house is further away and you drive every day to work there. Clearing the property with chain saws, mowers, pressure cleaners, and misc. equipment usually uses a bit of fuel as well. When budgeting overcompensate funds allotted for fuel and you’ll have funds to pull from for the unexpected later.
Your Personal Preferences
Create a house that potential buyers would want to move to and not a house that you would love. You shouldn’t flip a house or design a project according to your own tastes, that’s a recipe for disaster.
People’s tastes are different and what you vision as awesome others may not.
Remember to keep your outgoing budget costs as minimal as possible. Potential buyers may not see your vision as beautiful and that may hurt you. The buyer may want to rip out whatever work you’ve already paid to be done because they have their own plans.
Perhaps most important, the price may need to be higher to cover designing according to your most excellent taste.
The idea of house flipping is to get in and get out quickly and to make the most money possible from the flip project. Unnecessary budget expenses defeat that purpose and it puts the business at risk, stay on track with your budget. Neighborhoods all have a certain design, style, and flair, some have HOA’s, stay within those parameters.
Most potential buyers visit neighborhoods ready to purchase and they have usually done their own homework.
Time Is Money
Never forget that time is money and time cost money, things that take more time cost money. The longer time it takes to get a flip sale ready the less money you make when it finally sells.
Do some cosmetics early to get some pictures to get the house back on the market asap. Plan quick inexpensive changes that have a huge impact to get the most out of the flip.
Having interested potential buyers before the house flip is complete can greatly increase the chances of selling the finished project. Nothing is quicker than word of mouth of the restoration project in the neighborhood.
Time spent planning can save you valuable time when the house flip becomes a hands-on project that you begin. Budget the flip accordingly, you need to set deadlines for the project and stay on course, your time is your money.
Make certain of what is getting done, mistakes can be very time-consuming and costly, people still need to be paid. Paying for time wasted on mistakes can quickly get very expensive when it’s an entire crew that you have to pay. Staying on time and within budget is crucial to get the most return possible on your house flipping projects.
Upscale House Flip
Never attempt a champagne flip house unless you have a champagne budget to do the work. Be prepared, expensive homes can sometimes take longer to find interested buyers ready to purchase.
Never attempt to flip a house in an upscale neighborhood unless you can afford the impending costs associated. Upscale building supplies come with higher prices and installation costs, upscale appliances cost thousands.
Sometimes a flipper can get lucky with this type of champagne flip house and walk away making a bundle in profit. However, unless you have the budget needed I’d stay away from this type of flip, it can eat an entire budget quick.
Consider the audience interested in buying your champagne flip house will be much smaller than the normal flip. Paying for a house of that magnitude while waiting for a buyer can be very expensive if nobody bites for a while. You could get lucky and sell quickly or you could spend a really long time trying to land a buyer for the house.
Thanks for reading my Beginners Guide To House Flipping.
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