Many people assume they can easily buy a house, apply a fresh coat of paint, trim some hedges, then resell the home for a huge profit. But in reality, the flipping process isn't quite so simple. Here are four things you should know about taking the flipping plunge.
- Smart house flippers enlist the support of real estate agents, attorneys, contractors, accountants, home inspectors, insurance agents, and other knowledgeable professionals.
- Flippers should get to know the home values in the neighborhoods in which they are considering buying a property.
- Flippers who possess do-it-yourself home improvement skills can save money while helping expedite the renovation process.
1. Assemble a Group of Experts
Flippers often must race the clock, in an attempt to renovate and sell homes, before financing costs cannibalize their profits. For this reason, its wise to cultivate the support of real estate agents, attorneys, contractors, accountants, home inspectors, insurance agents, and other in-the-know folks who can help you complete the work in a timely and efficient manner.
2. A Good Lay of the Land
Flippers should learn about the neighborhoods in which they're buying properties, including the prices homes sell for and any planned developments in the community, such as the construction of new schools or shopping centers that could make zones more attractive and spike property values.
3. A Good Estimator
Flippers must typically make some structural and/or cosmetic changes, in order to make properties more appealing to buyers. Underestimating the costs associated with refurbishment could result in large monetary losses. To avoid this misfortune, flippers should familiarize themselves with construction materials, local construction codes and labor costs, and projected timetables for completing tasks. But be warned: all of this recon requires a steep learning curve.
4. A Handyman or Knack for Home Improvement
The most successful house flippers are do-it-yourselfers who can lend a hand, by installing sinks, changing countertops, and doing basic electrical and plumbing jobs. Not only will this save money, but it will also speed the process along when hired professionals are unavailable on short notice when time is of the essence. For example, a flipper may suddenly have to obtain a certificate of occupancy at the last minute, where they may need to quickly install a ceiling fan or complete other smaller tasks.
The Bottom Line
Before quitting your job and becoming a full-time house flipper, be certain you fully understand what you're getting into, and how you can navigate the process as smoothly as possible. Furthermore, good flippers are constantly on the lookout for ways to save money and leverage their investments. If you aren't buying the home with cash, it's important to secure a mortgage with a favorable interest rate.