House flipping is coming back into fashion—but not everyone is cut out for it.
Buying a run-down house and then upgrading and repairing it, to then sell it for a profit isn’t for the faint of heart.
Flipping a house isn’t easy, but there are ways to make a profit on your first attempt. From choosing the right house to having a good contractor, follow the advice from expert flippers to come out of the process with a profit.
Find the Right Property
At the height of the recent housing crisis, home flippers had a glut of inventory to choose from and were often able to purchase a home below market rates, fix it up and easily sell it for a profit. While some markets still allow for this situation, many markets are experiencing low inventory--making it hard to find a cheap property.
Set the Price
Before a novice investor chooses a home to purchase, he or she has to first figure out what the home will sell for once it’s rehabbed. To arrive at a price, investors can review selling prices of similar houses in the area or to work with a local real estate agent.
Find the Right Contractor
Another key person to have on your team is a general contractor who can detail exactly how much the renovation is going to cost. One of the biggest mistakes house flippers make is underestimating how many repairs are needed and their costs. I advise you to always be conservative when estimating the costs and add an additional 10% to be on the safe side.
Set a Timeline
Long gone are the days when you can purchase a house one day, make repairs for a couple of weeks and then sell the house in a month or two. These days it takes an average of four to six months to flip a house. In some markets it can take even longer than that, which means your costs could increase while you make the repairs and put it up for sale.
Experts suggest factoring in the flip time into your budget and your potential profit before you purchase the home. According to investors, a successful flip is one that makes you around a 15% profit.
At the end of the day the best way to stack the odds in your favor is to purchase the right house at the right price. Location and curb appeal will play big roles in how quickly and for how much a home is purchased. “Don’t let emotions and a strong desire to get your first deal done get in the way,”
"People want the first deal so bad they will fudge the numbers to try to make it work.”
Find properties; www.arubahouses.com