Flipping houses can be lucrative, but it's a risky business if you're not disciplined. One of the big challenges for first-time flippers face is that they spend too much on the property and put too much into it, then they can't make their money back in the sale of the property. Here are a few tips to help you during the house flipping process if you are doing it for the first time.
Choose a Fixer-Upper
To get the right house at the right price, you will need to buy a fixer-upper. Make sure to hire an inspector so you don't accidentally buy a fixer-upper that is unsalvageable. Work with a contractor you trust and ask them to check out important factors such as the condition of the foundation. Review the back yard for electrical access and look for a sewer cleanout. This is critical in older neighborhoods as replacing the sewer line will be a challenge if the former owner built a garage that limits access to the back yard. If possible, buy a time capsule that needs updating but doesn't need a lot of structural repairs.
Match the Quality of the Other Homes
You'll set your offering price on comps pulled from the neighborhood or on the tax valuation of the neighborhood. Then you need to get it for a low enough price that your upgrades don't price you out of the neighborhood. Be very careful to keep the house similar in size and color scheme to the rest of the street. Your objective should be to match the quality of similar houses in the neighborhood. Don't buy the biggest house and make it bigger or add features that make the house stand out.
Go Simple and Stay Flexible
When flipping, remember that you want to turn a grubby, unloved house into a nice vanilla home. Don't put a $50,000 kitchen in a $75,000 house. You will never get your money back. Make sure to spend a good amount of time making a budget for flipping a house, but make sure to give yourself plenty of time and money to work with. When planning the flip investments, you’ll want to make sure that you round up both money and time. You may get great deals on materials but have to wait two weeks for the plumber, or you may have a carpet guy who can start tomorrow but need to pay more for flooring.
Flipping looks easy on TV. It's not. You're going to have to get your hands dirty. Few projects come in on time or on budget. But with focus and a willingness to put your back into it, you can build a rewarding flipping business.
If you’re renovating a bathroom while flipping a house, try one of these design ideas!