TV shows that depict house flipping make it look fun and easy. But everything looks easy on television. Flipping houses can be interesting, and you might even have plans to work on the house yourself. It can be quite an attractive endeavor to the type of handy person who enjoys fixing things. But there is a lot more to it than you would assume.
First of all, it is a lengthy process. Finding the right house takes time; finding the right buyer to recoup the time and money you spent on the house can take even longer. The actual process of fixing it up is often the least time-consuming part.
Also, fixing up an entire house is not feasible for one person. There are some repairs and upgrades that you need a professional to handle. Installing insulation and doing an energy audit needs to be done by certified companies. Otherwise, the house can leak and cost way more to heat than most people would be willing to pay. Garage door springs are dangerous and can cause high levels of injury if not handled by a garage door repair expert.
Real estate is a lucrative field, and flipping a house is easier in theory than being a property manager or a landlord. Yet, there is a lot more to flipping houses than one would think, and in this economy, it is best to find out all you can before you invest your money in a brand-new venture.
Manage Your Budgeting
Before you begin down this path, you need to be sure that you have the financial resources to carry through to the end. Your budget for buying the house must be separate from the budget for repairing and remodeling the house.
In addition, it is better to choose a house that needs remodeling more so than one that requires extensive repairs. Building inspections are bound to reveal expensive fixes. Thus, ensuring that you have the budget to meet any sudden expenses such as this is vital to reducing the time you spend remodeling the house. If the repairs cost so much that the potential selling price turns out too high for the area, you will find it difficult to make a worthy return on investment.
Practicality Over Passion
Avoid choosing a property because you are attracted to the house. The desire to work on the building may cloud your judgment if it is a beautiful older home or an architectural masterpiece. But these older buildings are often riddled with issues that are expensive to fix. Unique houses may be tempting to people who enjoy working on such buildings but may not attract buyers. The kind of person who would appreciate a house like that and have the money to purchase it would be harder to find.
It is in your best interests to sell the house as soon as possible, as the longer it stays in your possession, the higher the costs for you. Be practical with your choices and choose homes that are modern and thus easier to update. Homes in accessible neighborhoods are also a better investment than ones in the wilderness. It may be a beautiful area, but few people have the finances or desire to live in the wilderness. Your best bet is a modern house in a popular suburb that provides ample access to commuters and good school zones.
Work With People You Know
Once you find a contractor or general repair firm that you trust and provides good quality work, consider using them regularly. It would be less costly for you in the long term to work with a group of people who you can trust than to find new people every time. New firms cannot guarantee the quality of work, and you may end up having to re-do their work. This is expensive and best avoided.
Cheaper quotes from contractors may seem lucrative, but handymen take pride in their quality work charge accordingly. Working with one firm will provide you with opportunities to negotiate lower rates based on longer-term contracts. This will save you money and guarantee a quality of work that will increase the value of the property.
Once the house is finished, you know how much it actually costs you to get it to this point. This may cause you to consider increasing your selling price. The selling price will change depending on the budget you spent on the repairs. But, it is best not to allow this price to fluctuate too wildly. Most real estate agents would be aware of how much the house cost before, and they would reveal this to their clients. They would then inspect the new flip house with a critical eye. If the changes and repairs do not seem worthy of the new selling price, you can lose many possible buyers.
Be open to negotiating the price. If the price is low enough and the repairs are modern and attractive, you could generate a lot of interest from buyers. When they see how many people are interested in the property, they will offer higher prices till you can eventually sell at the price you originally wanted. This is a tactic that works best in good neighborhoods that are popular already. The tactic may not work as well in neighborhoods that don’t attract many buyers.