If you want to get started flipping houses, there are some significant figures that you need to know.
First, you have to know what the nicest houses in that neighborhood are selling at; these are called “comps” or comparable sales. The neighborhood houses will be the number you will shoot for when you list your flip. If you are not familiar with pulling comps, contact a local realtor and let them help you determine the value.
Second, you have to know how much the rehab is going to cost. John Horner, Owner of Central Ohio Home Buyer, said, “I always suggest taking a few contractors to the subject property and get a few quotes on renovations that match the style in other houses in the neighborhood.”
The last thing to consider is the holding costs, something most people forget to calculate. Property taxes, insurance, utilities and interest on money lent can be the difference between making money and losing money on a flip. Before you purchase, figure out how much holding costs are going to cost and plan on at least six months of holding costs.
Another piece of advice is profitable flipping is not for novices working alone. Predicting success is difficult, and the road to profitability comes from on the job training. There will be unexpected surprises, disappointments, and losses.
There’s more to flipping a house, though. If you want to start flipping homes here is some advice.
25 Tips for Flipping A House
- Get Smart. “Get to know real estate agents in the area who can begin marketing the property immediately after you purchase it, and even before the renovations are complete,” said Janine Acquafredda an Associate Broker.
- Team. “Get your crew together in the location you are purchasing before you buy. My last flip was a borderline disaster because I was buying outside of my usual area and spent the first two months interviewing a crew instead of demolition and building. That was two months of expenses that needed to be paid and two months of time lost in a prime seller’s market.”
- Start Small. “Buy smaller homes than average in a neighborhood and don’t buy the ugly duckling,” suggests Brad Chandler is the CEO and co-founder, Express Homebuyers,
- Get In & Get Out. Buy in areas where days on market isn’t more than 90 days.
- Follow The Rules. Pull permits when needed.
- Upgrade Wisely. Spend money where needed. It doesn’t pay to be a cheapskate.
- Be Modern. Work with a sound designer who will keep you up on the colors and trends.
- Test The Waters. Pre-market the home before renovation is finished, so it will sell faster.
- Warm Up Your Buyers. On a similar note, let agents know they can bring buyers to your property before it’s finished so buyers can choose small things, such as colors or finishes.
- Pictures Sell. Get professional photos taken for marketing.
- Keep It Clean. “Keep the house clean once it’s on the market,” states Brad Chandler of Express Homebuyers
- Seek A Mentor. Find a partner with cash who is experienced in flipping houses for your first few deals. You don’t want to get in a cash flow crunch, advised Todd Hutch of I Buy Homes.com.
- Decks or Patio. “If possible always have these. Decks and Patio’s help sell a house plain and simple,” stated Debbie Bullinger of Cummings & Co. Realtors.
- Landscaping. Be sure to clear out all dead bushes and shrubs. Plant new plants to give a fresh look. The outside of the house is just as important as the inside of the house.
- Add A Bathroom. Make sure your renovation has at least two bathrooms. One of the reasons people move is not enough bathroom space for a family or roommate. An extra half bathroom couldn’t hurt.
- Light It Up! The right lighting fixtures can make a difference. Some renovators are using the industrial type of lighting to add style.
- Storage Space. Make sure you are building some storage into the house. Storage closets can be added under steps; closets added at the back of basements, and in empty wall space, especially in city houses.
- Budget Conservatively. Make sure you get a good estimate from the contractor. Also, you should have a little money aside for things that might come up later in the renovation. Once the walls are down, other issues can arise that need to be fixed. Keep the budget on a spreadsheet. On the next house, you may be able to learn how to improve that budget, added Debbie Bullinger of Cummings & Co. Realtors.
- Finish With Paint. Don’t leave the house white. Paint the walls a rich neutral color and baseboards something different. Give your house warmth. Match all the paint colors to the cabinets and the countertops before you paint the house.
- Basement. You should finish the basement whenever possible. At the very least, the front of the basement. People like the extra space it provides.
- First Impressions. The house should have curb appeal. Make sure that you don’t change the front of the house to something that would stand out too much and upset the neighbors. Neighbors want to see that you are making the house blend in. If you paint the house purple, you might upset the neighbors. They may complain to the contractor every day until that house is done or to potential buyers.
- Be Creative. Set yourself apart from everyone else on the market. Try to find one place in the house and give it something extra. Everyone likes extra touches. Can you put in a special ceiling in the bedroom with lighting? Maybe a built in bookshelf in a wall?
- Tax Credits. Are there tax credits for the house that will pass on to the buyer? In many areas, your buyer can get a tax credit because you renovated the house, making your house more attractive buyers. Know what improvements you need to make to be eligible for the tax credits.
- Room To Breathe. Make sure that your home design is open. Are the steps of the home cutting across the house? You may need to move those steps against the wall. Keep in mind that you can redesign the house to improve its function. You can hire an architect to help redesign the space.
- It’s Business, Not Personal. “I’ve been flipping houses for a while, and the biggest tip I can give is – don’t get too emotionally attached to a house,” said Jamal Asskoumi, Owner of CastleSmart.com. It’s easy to walk into a property and immediately think ‘I love it, I have to have it’. Don’t do this! It will sway your negotiating. Always low-ball and wait for their response.
Not anyone can flip houses, but with the tips provided here, you’re off to a great start!