September 02, 2015 - 12:00
Our strategic partner, Houston Homes Investments, has multiple successful flips in the last few years. I hope this article would save you some money and time if you are newer in this industry.
1. Don’t forget to check out the neighborhood before buying.
The purpose in property flipping is to get in and out quickly and spend enough money in order to make as much money as possible. If you go to a neighborhood that has 10 houses for sale or rundown, you might not be able to sell as fast as you wish. You don’t want to buy the most expensive house or the biggest one in the neighborhood. Buyers are smart and they don’t want to pay $150,000 for a house in the $110,000 neighborhood. So, don’t pick the nicest and biggest house in the area and expect to sell it fast for top dollars. Unless, you can buy it cheap.
2. Don’t just believe in your realtor when buying an investment house.
In fact, you don’t just believe in anyone selling you a house and tell you that the value will go up in the area in the future. You buy it for the current market value and you should know how much you can get out of it if you sell after repair. You have to look for realtors who are working with investors before and it’s even better if the realtors are active in doing the investments themselves. Before I listen or learn from someone for something, I’d need to know if the person has been done it successfully himself. There are so many sad stories of people who just blindly buy houses because they believe in the realtors without doing homework.
3. Don’t spend money you don’t need to.
I know you are excited to get the house under contract. You are more excited to start working on it after closing. You would put your emotion in the house as if this is the one you are going to move in. You would upgrade anything and everything you could. You end up go over your budget and time. You surprise why people don’t pay you more than you would expect.
You should avoid costly expenses that aren't exactly necessary for the successful completion of the flip. I.E: Resurface bathroom fixtures rather than replacing them and use new cabinet doors or hardware rather than adding new cabinets…etc. Remember, salvage what you can, fix what needs to be fixed, and add a few cosmetic touches before moving on to big things.
4. Don’t jump in big project at first.
This alone would cost you a big fortune. You should start out with a small project and learn from it. Big project requires more planning and budgeting. In fact, you might find some experience people to partner with or get advised from if you don’t want to lose money.
Real Estate market is not always going up as you might have heard from realtors. You should avoid putting too much time and money on a property that isn't going to recover those added touches and expenses. Until you have a few successful flips under your belt, you might try out the higher end flips. However, it’s still safe to have a good advisor who has your best interest at heart all the time. Our company still has a coach who we can ask questions and get advices when needed because that’s the fastest way to move up to the next level. Have a look for yourself! All successful people or company have a coach.