The current real estate market trends definitely offer a great return on investment for fixing up and flipping homes. Fixing and flipping properties gives you more options for investing, changes your target demographics, and breaks down the walls of neighborhoods to choose from. Here’s the 4-part plan to get the most for your money when house flipping.
How do you know if you should fix up and flip the house?
This is a great question to start with every time you encounter a potential property. Some homes are too far beyond repair, and others have surprise issues you can’t see from an initial look through. Always consider your level of expertise, investment, and back up plans. Fixing up and flipping homes can be a great investment where you will see some great ARV (After Repair Value), but you need to choose the right house. You need to be quick on your purchases when it comes to house flipping due to competition and the timeline of fixing homes. The best way to do well with house flipping is to plan ahead, establish a team of professionals, and to be strategic.
1. Financing is the first step to planning.
Financing is an obvious part of the plan, however, it’s amazing to see how many people don’t put enough time and research into this step. Knowing where you stand with your finances, what your options are, and what is best for you is extremely valuable. If you’re getting into the house flipping business, get to know all your financing options. There are many ways to finance a real estate project. Assess each property and find the best option, such as:
- Traditional banking/loans
- Hard money
- Private money
2. Get good at estimating.
With house flipping, there is always a risk of unexpected costs. So, when you’re initially planning out your budget, try and get your estimated costs as close to the real costs as possible. Even over-estimating can be helpful. Your ability to estimate well will come with experience. Costs to consider include:
- Purchase cost
- Repair costs
- Licenses and permits
- Closing costs, and other legal fees
- Marketing costs / Realtor fee
As you continue to flip houses, your level of expertise will naturally increase. The more you know, the more the costs have a chance to decrease. If you’re just starting out, spend your money with the experienced professionals, and ask questions. Just make sure it’s in your estimated costs. Knowing how much you’re going to spend will determine how much you can fix up a property, and how much you need to sell it for.
3. Start your team of contractors and professionals.
Everyone has a different level of skill, experience and view point. Use that to create a powerful team of experts, flipping houses for the best return on investment. Having people with varying expertise on your team will only increase the real estate investment opportunities. When you’re checking out a potential property, it’s even helpful to have some of that team with you. The team doesn’t necessarily have to be your full-time employees. Rather, get to know local construction workers, project managers and real estate agents. In the long-term, these professionals may become a full-time team, but for starters, just having people to call for individual jobs is going to help you out. A real estate agent is going to help you list the property, and brings the experience of knowing how to sell, well.
4. When it’s time to sell, be strategic.
Selling a home is all about helping the buyer conveniently visualize the home as their own. Make the home look its absolute best, and you’ll be able to sell it for more.
Having the house staged, especially after a major rehab, will help the potential buyers see what it would be like to live there. When you fix up and flip a home, you are creating an up-to-date and new living space. So, showing how the house could look will make it easy for the potential buyers see themselves living there – almost guaranteeing a sell. Making the layout of the house easily visible for the buyer makes them work less on seeing the potential. Show them the potential, so all they have to think about is how great their furniture and decorations would look in their newly purchased home.
· Video tours:
If you are posting anything online, and are able to do this well, video tours are a great tool. If you, or someone you know, is great with filming, add this to your selling strategy. A simple, but full walk through of the house is going to help your target audience assess the home before they see it in person. This will save you time with people who are not as serious. In turn, this will create the time you need to show the house for serious buyers, technically showing for the second time if they feel they’ve already walked through it online. Know your target buyers. If they are used to convenient shopping, video tours will be an investment worth making.
· Online posting with photos:
Maybe video tours aren’t expected from your target buyers. Posting photos online is expected by everyone. Photos with your online listing and your website give your potential buyers insight into what kind of flipping you do and what your properties look like. Online photos will assure the buyers of how much work has really been done. Photos also convenient for you in meetings to show unexpected buyers their options.
If you plan ahead and are strategic, you are on the right path for flipping houses. Assessing whether a property is worth the fix up and flip is a great starting place. These other 4 steps are crucial to the flipping game, and will get you the sales you are looking for. Don’t hesitate to check out our other blogs pertaining to this subject, too!