The Real Estate Encyclopedia
4 Great Tips for Flipping a House
Category - Real Estate Information Sources - Real Estate Articles

A popular way to make money through real estate investment is to flip houses. This process involves finding a low priced fixer-upper, giving it a face lift and then reselling it for a profit. One of the main keys is to finish the renovations fast and get it back on the market and through escrow as quickly as possible. Here are some fantastic tips for turning a great profit from a flipped house.

1. Buying Low

“If you pay too much for a property,” writes Brandon Turner a real estate investor, “no amount of spit and shine is going to give you any better financial outcome.” The key to making a good return is buying low. Your work on the fixer-upper won’t add as much to the value as you want to make without finding a purchase price that is a steal.

It takes patience to find these properties and make offers. One investor says that his rule of thumb is “If I don’t blush when I offer, I offered too much.” Make multiple offers until you find a deal that is totally worth it. And while you’re waiting, don’t be tempted to buy at higher than you originally want to. Patience and persistence will help you win in the end.

2. Don’t Miss Out on the Midrange Market

Finding a cheap house doesn’t necessarily mean that you can rake in more profit. If you purchase a home for $230,000 but have to put $50,000 worth of work into the project, then you are probably better off buying a $280,000 home that will save you all of that repair work. If the future value works out to about equal, then give yourself a break and choose the property that needs less time and effort.

Another great factor about these midrange properties is that they are often overlooked. The slightly higher price point causes many investors to write them off as flappable homes. This might just provide the opportunity for bargaining to a lower price while saving you a lot of work.

And finally, these middle priced houses lessen the risk involved in flipping a property. A hope that is desperately wanting TLC often turns out to need more work than you estimated. Hidden foundation or mold problems make these fixer-uppers a gamble. Choosing to spend a little more initially might help avoid this sort of hassle. However, it is important to remember that any house you choose still involves potential surprises. This is part of the nature of the game.

3. Remodeling Costs a Lot

High from a recent episode of Flip This House, many new flippers make the critical mistake of being unrealistic when it comes to remodeling and repair costs. Factor a good cushion into your budget and don’t be overly optimistic with your numbers. From a new sink, to tearing out rotted floor boards, to replacing the hot water heater, costs add up incredibly quickly, and there will almost always be some unforeseen crisis that messes with your budget. This might lead to your look for a short-term loan from TitleMax until you can recoup costs from the sale of the house. When planning things out, it is advisable to double your projected budget as well as your time table. Another wise step is to align yourself with a contractor you trust. They can help you when estimating the home’s worth and the work required as well as in doing the actual construction projects.

4. Compare Your Project with Similar Homes

In today’s rough market, your property needs to stand out form the competition. This involves two main factors: quality and price. While gathering research before purchasing the home, you should already have collected quite a bit of info on the local market and what similar properties are going for. Continue to play the comparison game as you remodel and put the house back up for sale. If all comparable homes have a particular feature like granite counter tops, then yours probably needs it too in order to compete.

With these important steps in mind, you can effectively flip a house while minimizing cost and effort and maximizing profit.  

 
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