Thinking of Flipping a House? Here Are Some Tips

flipping a house

House flipping means that you buy homes at low prices, make improvements and then resell them for a profit. There are several television shows that follow “flippers” through the journey of buying the house and quickly reselling it for a large profit; unfortunately, these television shows are made for entertainment, so they don’t show the entire process or the complicated details that may be involved. In reality, flipping houses is a business, so there is a risk of losing money and there may be unsuspected surprises along the way. However, if you know what you’re doing, flipping properties can be a good way to earn a living. Here’s a peek inside what it takes to profitably flip properties.

Make Sure You Find the Right Home to Invest In

The first and most important step in the process is finding the right home to invest in. There are numerous sources you can utilize for finding properties, such as auctions, foreclosures, or short sale negotiators. Finding the right property means understanding the resale market so that you can distinguish between a potential profit and a money pit. Of all the homes in the US, about 85% of those that were built before 1980 will need home improvements and frequent maintenance, so it may be beneficial to start your search in a neighborhood with homes built around this time period. Keep in mind that finding the right deal takes time and effort, so in most situations, finding the best deal means physically scouting for homes as opposed to searching online.

Have a Budget

Creating a budget and sticking to it is the most important factor when flipping a house. You will need to get the funds needed for the improvements ahead of time, so it is critical that you set a budget for each part of the process and if you need more for one project than you expected, you’ll need to reduce the amount you allotted for another project. For instance, if you allot $5000 for a roof and $3000 for flooring, but the roof ends up costing you $6000, you could consider reducing the flooring budget to $2000. Staying within the allotted budget will not only ensure you that you’ll make a profit when the house sells, but it will also prevent you from having to use your personal money to supplement the difference.

Don’t Forget About Curb Appeal

When flipping a house, there are a variety of strategies you can use to ensure you sell the house quickly and make a profit. However, one of the most beneficial yet overlooked strategies is curb appeal. Regardless of how great the inside looks, without making the outside of the property attractive, it may be difficult to find prospective buyers. Whether they are searching online or driving through the neighborhood, the first thing potential buyers will see is the outside of the house, more specifically they will see the lawn and landscaping. In many situations, you can add as much as 14% to the resale value with landscaping. So, pay close attention to the exterior details.

Know What to Look For in a Potential Flip

Finding the least expensive house in an expensive neighborhood is the simplest solution, but this isn’t always possible, However, it is possible to make a great profit in a less expensive neighborhood as long as you search for inexpensive homes that have a good school district, are near life needs, such as easy access to grocery and department stores. Another thing to keep in mind is the number of updates required. For instance, if the cost of a house in a great neighborhood is slightly higher than you anticipated, but it only needs cosmetic updates, such as paint, landscaping, and floors, you can still make a good profit as long as you can do the improvements inexpensively. When touring a potential flip, simply imagine what the house can look like when it’s done. Keep in mind that even an ugly, outdated house can be made attractive with something as simple as a few coats of paint.

Stage the Home With Your Prospective Buyer in Mind

Once you have finished making the improvements, and it’s time to put the house on the market, this doesn’t mean your work is done. You will need to market the house in order to get the best return on your investment. The ideal way to accomplish this is with staging. You want the house to feel like a home, it should be inviting and encourage potential buyers to picture themselves living there. Instead of empty rooms, stage the house with furniture and decor that makes the house feel like it’s ready to live in. How the house smells is as important as how it looks and an easy way to add comforting fragrance is by contacting one of the currently estimated 36,613 florist businesses that are located in the United States. Adding a few bouquets of flowers throughout the house will provide color, comfort, and a soothing fragrance.

Remember for a successful business it’s important to stick to your budget as well as your strategies, for instance, for the first flip you may want to focus on single-family residences that are in good neighborhoods and only require a few cosmetic updates. Have a good team working with you and although you should do as much of the work as possible on your own, you should never attempt to do a project that may end up costing you more to repair your DIY than it would’ve originally cost to hire a professional.