5 BEST TIPS TO FLIP HOUSES
NO MORE LIPSTICK ON A PIG, FOLLOW THIS ADVICE
5 BEST TIPS TO FLIP HOUSES
Even though we are not in the real estate boom days of mid
2000s, residential flip investors are flooding the market even with a limited
amount of inventory available throughout the US. Investors that focus on flips
have found themselves going back to more creative ways to find potential
opportunities in order to continue rehabbing homes for profits but with the
increase in competition, the margins just get tighter. That is why as an
investor, you must be more thorough and do your homework before you pull the
trigger and acquire perhaps your last flip if you don’t follow these 5 tips.
These are the top 5 tips to flip your homes successfully in
2017.
1. Buy Right
Many investors do not do their homework right and start off
with the wrong foot cashing in on high expectations that their investment will sell
at the right time and for the right price. Successful investors make money when
they buy not when they sell and there is no reason why you shouldn’t do the
same. Analyze your properties more diligently when you purchase and consider the outside factors that go
beyond your property but that can still affect your selling price. Making money when you buy means that you took
into consideration all the elements that can affect your resale price such
as the property being in a busy street,
to close to apartment buildings, near a cemetery or in an area with bad school
ratings.
2) Forecast
Repairs
Being able to estimate repairs on a property is just as
important as being able to predict the resale price of the property when you
resale it. If you are not taking the time to walk the property with your
general contractor then you will regret it. I often suggest for investors to
pay for a home inspection because you will be able to see almost everything
that is wrong with the property from a qualified professional. Taking your
general contractor to the property is a must but getting a paid independent
inspector is one of the best investments that you can make before you pull the
trigger and purchase a property with hidden surprises that will empty your
wallet.
3) Budget
Obsessions
The third most important tip for successful flipping comes
from the art of budgeting. Having an accurate forecast and sticking to a budget
go hand in hand. You cannot have one without the other because if your forecast
is wrong, it doesn’t matter how tight you are with your budget, you just will
not cut it. Once your forecast is determined, stick to your budget even if you
have to make sacrifices in aesthetics without compromising quality. Focus on
the fundamental areas of the house that must be operational first such as roof,
electrical systems, plumbing, foundation, termites and city code violations
before you focus on the paint color or mirrors. Buyers are more interested in the
working plumbing than the $700 toilets and fancy shower heads that they won’t
be able to use.
4) First
Impressions
Once you have been able to cover the major fundamental areas
of the house and if your budget allows you can now focus in aesthetics. Make
sure you have budgeted for landscaping since that will be the first and last
impression your buyers will come and go with as they drive to your house.
Lightning is one great investment also since you can buy knock off versions of
designer fixtures at fraction of the cost and with the right decorations they
can really make good impressions. Chose warm welcoming neutral colors to paint the
interior and paint everything, including closets, baseboards and interior doors.
The goals is to make your home feel and look brand new but also taking into
consideration that buyers are more sophisticated now and will look under the
sink to see if you have leaks or in the attic to see if you have exposed wires
or roof leaks.
5) Sell
Right
If your goal is to buy fast, rehab cheap and sell above
market price then you are speculating and will soon learn your lesson. Buy
right not fast, rehab with a budget but not cheap and sell right. By selling
right, I mean that you have to know your competition. Look at standard sales in
the area and compare them with yours. If your house is better looking with a
better rehab and it looks and feels like a new home compared to other
properties for sale in your neighborhood then you should expect to get a
reasonable price above market, but be realistic. The problem with that analysis
is that most investors get too emotional with the home just like the average
home seller. They think their house is their baby and it’s so much brighter
than the rest which is why you need independent opinions from professionals
that will guide you to the light. Don’t just go with any listing agent,
interview multiple listing agents and tell them to give you their honest
opinion of what is wrong with your house versus the comparable. You already
know the beauty of your baby but if you want to improve you need to be ready to
listen to your mistakes in order to prevent them and fix them.
Remember the goal to flipping is to make money. Be true to
yourself and ask third parties to give you their opinion before you make any
drastic decisions without compromising your ability to make a fast decision.
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About the author.
With more than 15 years of real estate and finance expertise, Luis is an industry expert with experience in various asset classes. His background includes financing of commercial and residential properties and management of various joint ventures, partnerships and strategic alliances. As a managing member of HIS Capital Group, Luis analyses the investment opportunities that meet the company's balanced investment approach. Luis also helps real estate professionals, developers and operators grow their business by offering flexible investment loan products that can help them grow the investor's portfolio.
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