May 05, 2016 - 05:24
There are important steps you should always do before, during and after you flip a property. Surprisingly, many investors fail to follow these steps, especially if they are just starting out in the profession. Its good to do as much research as possible regarding anything in real estate and flipping property, but the best experience you will get is to go out and start. Here are a few things to consider once you are flipping a property, it will help you every time.
Don’t do the work yourself
Many new investors tend to have the idea that a good way to save money is to do most or all of the remodeling yourself. But this is actually the opposite of what you should be doing, working on the property yourself or with a group of friends will save you contractor fees but it will waste most of your time. In other words, instead of spending most of your time working on the home you should be out looking for your next potential deal to invest in. So get a contractor or several sub-contractors and have it done quickly, because what can take you 6 weeks to complete, experienced contractors can finish it in half the time. If you don’t have enough money to hire a contractor then have other people invest in you, because you need to have the house flipped ASAP so that you can get it on the market and sold. And if you calculated that you are not able to hire a contractor because your profit margins will be too low, then the purchase of the home was too high, which brings me to the next point.
Profit is made at the buy, not the flip
Many times people buy a house with the intensions of making a huge profit only to find out that they could not make any money after all the renovations because the purchased price of the house was too high. Remember, if you add expensive renovations it doesn’t necessarily mean that the maximum value after repair should go up a lot more than the neighborhood price range. If you do that then most likely the home will sit for a long time. So when you purchase your property you need to be sure that you buy the house with enough money to make renovations, pay contractor fees, carrying cost…etc. and in the end still make a profit.
Use a real estate agent
Remember, you always want to sell the house as quickly as possible, so doing a for sale by owner should be out of the questions because with a FSBO you will be depending on people to drive by the home and seeing your sign. Use the power of a real estate agent and the power of the MLS system; it will be faster selling your home there because you have someone actively marketing the home. At the same time, placing the property 1 or 2 percent below market value will attract a bit more attention. Get the house on the market at a price that is going to blow out the competition, and you will sell it no matter what the market conditions. Make sure that from the discounted price you will still have room to make a profit, and like I said earlier, profit is made from the purchase.