FLIP SMART: THINGS YOUR SHOULD NOT DO
Mold, wood rot, warped floors, a dated bathroom — these problems might seem a nightmare to the average home buyer, but to a seasoned flipper, a house full of flaws could mean profits. If you’re a budding flipper, here are a few smart tips that will help you to make the most of your investment:
DON’T GO OVER BUDGET WHEN BUYING THE HOME
it’s important to stay within your budget and purchase “at the right price” from the start. Additional costs can come later in upgrades to the house or contractor costs. So don’t get attached to a house when you walk in.
DON’T IGNORE THE UPGRADES YOU REALLY SHOULD MAKE
Some properties need only the bare minimum, such as putting a fresh coat of paint on the walls or adding carpets. But if the bathroom needs new plumbing or if the kitchen needs new appliances, you will get more your returns if you spend the money to make those necessary upgrades. Sometimes people don’t see the things they could do to bring the money back. there are some properties that don’t require a lot, but if the neighborhood will carry a higher price point, then you want the best use of the property.
DON’T BUY A HOUSE WITHOUT GETTING IT INSPECTED
Getting an inspection before purchasing a home, even if you have already put in an offer, is very important before going to closing. A few cracks in the foundation or a leaky window could be easy fixes or major problems. It could be a few hundred dollars. It could be a few thousand dollars.
DON’T SKIP ON RESEARCHING THE NEIGHBORHOOD
Doing lots of research on the neighborhood is vital in choosing a house to flip. You can go in a neighborhood and find some of the following challenges: there’s a lot of competition, the house has been on the market a long time, there’s not a whole lot more you can do to it to bring it up to good marketability. If you find yourself faced with these challenges, then you should strongly think about passing on that neighborhood.
Take note if the house is close to a retail center or is in a walkable, friendly neighborhood because these can be major selling points for attracting buyers. It has to be an area that’s up and coming, and it has to be an area that sells quickly.
DON’T PAY CONTRACTORS IN FULL UNTIL THE JOB IS DONE
Most respectable contractors have accounts at building material companies so they can charge the material amount then pay for it after the job is done. Some contractors require 50%. If you’re being asked to pay 100% upfront, you should see that as a red flag. You never want to put yourself in a position where you get duped by a contractor but you’ve already given away your budget for the specific project that they were hired to work on.
DON’T GET THE WRONG PERMITS
Different states require different licenses and permits for flipping homes. Some states require house-flipping businesses to be licensed as general contractors or, if the home is being sold through a subsidiary, require a real estate selling license.
Not only make sure you have all the permits you need for the job, but also apply for the correct permits and double check to see that the local authority providing the permits gives you the correct ones.
DON’T BE AFRAID TO RENT
After you have flipped a home and put it up for sale, it is a good idea to have a backup plan, especially in today’s housing market. If you buy something and you’re not sure if it will sell, you can put someone in it, and it will have a great return for rental.