The process of flipping houses may sound easy in theory. However, once you begin the practice yourself, you may run into several complications along the way.
From selecting the wrong purchase price to hiring the wrong contractor, avoiding the most common pitfalls associated with flipping houses takes a concentrated effort. Once you learn how to flip houses properly, you can start to increase the number of homes you flip and can, therefore, increase your profits along the way.
Many of the most important aspects of flipping houses are also the most basic steps. Once you master the basics, you are in a good position to start making money. Whether you want to make home improvements on your own or you need to hire a contractor to assist with the process, you must determine the best way to approach house flipping before you begin.
Estimate Renovation Costs Before Settling on a Purchase Price
One of the main things you must keep in mind before purchasing a home to flip is that the cost of the home will include both the purchase price and the renovation costs.
As such, schedule a home viewing first to gain a better understanding of what is working and what may require repairs once you own the property. You may decide you want to replace the kitchen countertops or realize that the home requires a new roof because the current one is patchy.
When you go into the process thinking about what needs to be changed, you will have an easier time estimating what your renovation costs will be. Minor cosmetic repairs can be done within a limited budget but gutting a bathroom or tearing down walls will cost a substantial amount of money.
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In addition to immediate repairs, take the time to calculate future repairs as well. A home may have damage that is not immediately visible, such as mold or decaying structural supports.
Technically, you can still live in the home for several years before these issues become urgent. However, any buyer is going to bring up these issues when you try and sell the house.
Before you decide on an offer price, take the time to total the cost of the renovations you want to do and then subtract this amount from the amount you are willing to pay to purchase the property. You do not want to spend most of your budget on securing the home only to find you do not have the resources necessary to complete the flip and get the home back on the market.
As a general rule, do not settle for a purchase price you are uncomfortable with as this can ultimately lead to budget issues throughout the renovation and resale processes.
Hire A Qualified Contractor If You Do Not Want to Do the Work Yourself
If you want to flip houses but you are not planning on doing the repair work yourself, you must hire a qualified contractor to ensure the project is progressing as smoothly as possible. Relying on friends to help you rip down a wall or undertake a landscaping process can breed a variety of issues, as this work must be completed by someone who knows exactly what they are doing.
You can make minor cosmetic changes on your own, such as painting the living room or replacing the hardware on the kitchen cabinets. However, for major projects, you want to hire a reputable contractor to ensure you are receiving the best price on available supplies and that the project comes out the way you want it.
Without a professional, you may end up spending your budget with nothing to show for your efforts. It may even cost you more to undo the damage caused by not hiring professionals in the first place.
To find a qualified contractor in your area you can conduct a basic search online to find someone with the best reviews. You can also ask friends and family if they have any recommendations for contractors. Moreover, you must establish a budget in advance to ensure you know how much you can afford to pay a contractor when employing them to complete your home renovation for you.
If you want to hire a contractor for a portion of the project and then take over repairs on your own from there, you may do this as well. You can determine how much you are capable of doing on your own before utilizing a contractor to complete the remaining projects you have lined up for your house flip.
Sell the Home in a Timely Fashion
Once you have successfully flipped the home you purchased, you want to expedite the sale as quickly as possible. The longer your house sits on the market, the less profit you make from the flip. To ensure you are selling the house in a timely fashion, spend time researching the current housing market to pick a competitive price point for your home.
If you overprice the home for the area, it may take longer to attract attention from potential buyers. Alternatively, in case you underprice the home, you may ultimately lose money on the flip. In the event that you do not have experience selling a home on your own, seek assistance from a local realtor to ensure you are pricing the home properly when you are ready to sell.
The way you present and advertise your home during the sale process can influence the amount of interest you garner once your flipped house hits the market. You want to purchase signs to place outside the home to draw people in. Additionally, organizing an open house can present potential buyers with the opportunity to view the inside of the home.
Investing money into staging the home may help you sell your property sooner, as potential buyers often have a difficult time visualizing how a new house can function without the presence of existing furniture. Don’t be afraid to keep some filler furniture and décor on hand to fill your home during the open house.
While it is important to sell your home and turn a profit, be sure you are choosing an offer price that can give you the highest possible profit for the home. It may be tempting to take the first offer for an immediate profit, but you may end up underselling your property. To remain in the field of flipping houses, you must generate a substantial amount of money each time you sell a home.
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