Have you ever wondered what is house flipping about? Learn more below.
Five House Flipping Don’ts
When it comes to making money in the business of flipping houses and other real estate investments you will find all kinds of do’s and don’ts along the way. The truth of the matter is that these are extremely useful whether this is your first house flip or you have been flipping houses for years.
In fact, you might just find that you can learn something new on occasion by reading lists such as this even if you’ve been flipping houses for years and have many successful flips under your belt.
What is house flipping about? If your new to house flipping and looking for a few tips on what is house flipping about than this post may help you understand what you should and should not do when it comes to flipping houses. Below is a list of five don’ts and five do’s for anyone looking to get involved in house flipping.
Check The Neighborhood
1) Check out the neighborhood before you buy. You will want to make sure that the property you are considering is a good fit for the neighborhood.
You should also take the time to the make sure that you have a plan in mind. The property needs to match well with the neighborhood residents in order to guarantee a quick sale.
2) Don’t blow your budget without just cause. Your budget is what you use to determine whether or not the house would be a profitable venture.
If you blow your budget and cannot recover the extra money in the selling price it’s game over you lose. You will seriously cut into your profit if not eliminate them completely.
The goal is to get in and get out quickly and spend as little money as possible to make as much money as possible.
Your Daily Goals
3) Set daily goals and hold yourself accountable to those goals. If you don’t reach your goals for the day it can set the entire project back. Sometimes that can be as much as a month depending on the goals not reached.
Stick to your timeline and your daily schedule in order to avoid potentially costly delays. Having goals to meet every day increases productivity.
4) Never neglect the exterior. Curb appeal is what brings buyers to a property much of the time. Don’t spend all your money, time, and effort making improvements to the interior of the home. Leave room in the budget to make the outside appealing to potential buyers.
Home buyer’s are in the market for the entire package. Homes that look run down outside would naturally seem neglected on the inside to buyers.
Salvage What You Can
5) Don’t spend money you don’t need to spend. Yes it would be great to put in granite counter tops into every home, but that isn’t practical. That often turns into money that will never be recovered particularly in homes that are in marginal neighborhoods.
To get the most out of your project you need to avoid costly expenses that aren’t necessary to successfully complete the flip. Resurface bathroom fixtures rather than replacing them when possible. Try using new cabinet doors or hardware rather than adding new cabinets, that cuts down on expenses.
In other words, salvage what you can, fix what needs to be fixed, and add a few cosmetic touches before moving on.
The market for real estate is a very fickle market. Avoid risking too much on a property that isn’t going to recover those added touches and expenses. Save those ideas for higher end flips once you have done some successful flips.
Five House Flipping Do’s
Some people have dreams of profits from flipping houses but haven’t put much thought into formulating the process. Having a formula is pertinent to success when it comes to flipping houses and for real estate investment ventures. A formula is a must for the sake of building a nice comfortable lifestyle or retirement.
You hear a lot about the things not to do when it comes to flipping houses but seldom hear about things you need to do for success. Thus begin your ride on the road to real estate investment riches.
Plan Of Action
1. Do put everything to pen and paper, write a plan out carefully before you begin. If you are going to enter into this to make money you need to treat it as a business.
This means you need to have a plan of action and make every effort to work towards carrying out that plan. Set some daily activities that become a habit as you progress forward with your plan.
Create a daily checklist that you can use to guide and keep your daily plans moving towards your primary goals.
Establish A Budget
2. Do establish a budget for the entire project. You need to have a plan for how much money you are willing to invest in the property. How much are the renovation costs? How much will you need for it to be a worthy investment for your time and labor?
A house flip is a lot of work in order to pull it off successfully. You want to have a good idea of the value of homes in the neighborhood of your flip. Than look at the value of your property as is and the estimated value of the property once improvements are made.
You need a repair cost involved in order to create a realistic budget for the entire project.
Inspections: Avoid Money Pits
3. Do have an inspection. This is the single most important detail that can save you a great deal of time, money, and heartache by the time it’s over.
Be prepared to walk away after the inspection. If there’s more work needed than simple cosmetics it may not be worth getting involved. Make changes that can be seen because those tend to drive up the value of the house.
You want to avoid the need to make changes and improvements that aren’t visible but are very necessary. If you need to invest a lot of money and labor into the house you need to seriously consider the realistic profit potential the property offers.
If it isn’t significant then you need to walk away before the property becomes a real estate investment money pit.
Understand The Area
4. Do know the neighborhood and plan your flip according to the needs of the area rather than your personal tastes and needs. What others see does not reflect what you see, stick to the needs of the neighborhood.
This is another thing that some first time flippers may ignore when starting out. This is not a personal project, this is a business project, treat it as such.
Keep feelings out of your plan, make decisions based on the neighborhood.
5. Do remember that you are in the market to make money and not waste money when it comes to establishing an asking price for the property. Despite blood, sweat, and probably more than a few tears you cannot set the value of the property based on the effort you’ve placed into it.
Have realistic expectations of how much you stand to earn from your efforts. Establish how much you are willing to go down on the price in order to walk away with some profit in your pocket.
You should also take a moment to consider that many first time flippers actually lost money with their first flips. When you turn a profit, even a small profit you learn valuable lessons that you can use on future flip projects.
More importantly the lessons you learn from your first flip are lessons that money really cannot buy so it is worth a lower profit. Your experience will make you money in the future as you travel your real estate investment path.
Try using second hand resources to help with your construction budget by way of second hand re-purpose stores. Stores like Habitat For Humanity sell materials well below new prices and in many cases the used pieces work fine. You can also buy materials from places like Craigslist which can save thousands of dollars in budget costs. Those savings equal higher net profits when you flip the house.
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