While flipping homes can be a fantastic way to generate large amounts of income within short spans of time, undertaking your first flip is liable to prove harrowing. If the bulk of your knowledge on the subject comes from flip-based reality TV shows, there’s a good chance you’re going to encounter problems throughout various phases of the project. In the interest of ensuring that your inaugural flip goes off without a hitch, put the following pointers to practical use.
As many experienced flippers and property investors will tell you, the location of a home is, in many respects, the foremost indicator of its value. For example, it’s hardly unusual for amenity-light homes that aren’t in the best condition to command higher asking prices than amenity-rich homes that have been meticulously-maintained – provided, of course, the former is located in a desirable area. So, before proceeding to make an offer on a prospective flip, you’d be wise to do some location research.
When researching locations, take care to look into population size, local economy, crime rates and property values. Property values are particularly important, as they’ll provide you with a solid idea of how much a potential flip is truly worth and how large a profit you stand to make from such an investment. As such, anyone looking to invest in house flipping should make location research a top priority.
Have the Home Inspected Before Buying
As is the case when purchasing any other type of real estate, it’s in your best interest to have any potential flip professionally inspected before committing to purchase. A certified home inspector will be able to provide you with an accurate rundown of any outstanding problems with the house, thus enabling you to amend any offers and make an informed purchasing decision. Additionally, once you’ve received the results of the inspection, take note of any repairs or renovations that have been deemed necessary and obtain estimates from relevant contractors. Then, after totaling up these estimates, request that this amount be reduced from the seller’s asking price.
Even if you’ve completed multiple walkthroughs of a potential flip, this should not be regarded as a suitable substitute for a formal home inspection. So, no matter how confident you are in the condition of a house, make sure to enlist the aid of a knowledgeable home inspector. Discovering large problems with a property once the flipping process is underway can prove immensely stressful and financially ruinous.
As touched upon above, a professional inspection is oftentimes crucial to identifying outstanding issues with a home. Furthermore, seeking out estimates from various contractors can provide you with a clear understanding of how much you can expect to spend getting a house in sellable condition. However, it’s also important to realize that contractor estimates aren’t always 100% accurate – hence the term “estimates.” That being the case, make sure to set aside some funds for unforeseen emergencies. Failure to budget for emergencies may result in you having to pause work mid-flip and wait a lot longer to sell the home than you’d like.
Don’t Use Unlicensed Contractors
If you’re thinking of cutting renovation costs by working with unlicensed contractors, you may soon find yourself in for a rude awakening. While unlicensed contractors tend to charge less than their licensed counterparts, they have far less incentive to provide honest estimates, see jobs through to completion or conduct themselves professionally. After all, they can’t lose licenses they never had. Furthermore, if an unlicensed contractor lacks proper insurance, you’re liable to get stuck paying their medical bills should they become injured on the job. In other words, you can save yourself a tremendous amount of time, money and stress by steering clear of unlicensed contractors.
If you have little to no experience flipping homes, undertaking your first flip is liable to prove daunting. Although you stand to profit handsomely from a successful flip, you also stand to lose quite a bit of capital if the project goes south. While it’s true that your first flip is likely to present you with some challenges, meeting those challenges head-on should be well within your abilities – provided, of course, you take the time to get educated. First-time flippers looking to keep stress to a minimum would do well to utilize the tips outlined above.