Television home shows have made the term “house flipping” a part of our everyday language. However, long before reality TV, house flippers were busy investing, flipping, and selling. In this article, we are going to discuss the ultimate how-to-guide for flipping properties. Use it as a refresher or as a map for your new house flipping journey.
Make the Commitment
If you have a fear of commitment, find a new hobby other than house flipping. Once the ball starts rolling, it’s hard to stop it. Make sure you’re not committed only to the idea of house flipping but also to the entire process—no matter how long it takes.
Understanding how to flip a property is more than just knowing how to buy a house, make it pretty, then sell it. There are plenty of other tasks in between.
Educate yourself about the real estate and house flipping industry. Here are a few questions to seek answers to before you begin flipping properties:
- What will it cost?
- What is the condition of the real estate market?
- What are the laws and requirements?
- How will it affect your taxes?
- Which area near you is best for flipping a property?
- How long does the process take?
As you find answers, more questions will come, and that’s a good thing. Don’t begin flipping until you’re confident you thoroughly understand it all.
The Market Is Everything
When the real estate market is favoring sellers, an investor looking for a deal isn’t going to do so well. On the other hand, when it favors buyers, the house flipper won’t get the return on the investment they were hoping for. When you’re house flipping, it’s essential to understand the temperature of the real estate market and strike while the iron is hot.
There’s no need to go about flipping properties alone. Possibly the most important piece of information to take away from our how-to-guide for flipping properties is to build your house flipping team.
Here’s who you need on your team:
- An electrician
- A plumber
- A landscaper
- A HVAC professional
- A real estate agent
- A Home inspector
Who you need on your team depends on how much of the project you intend to DIY. If you want as little involvement as possible, add a contractor to your team. The contractor keeps everything on schedule and provides the subcontractors, so you don’t have to hunt down the electrician, plumber, and HVAC professional yourself. They are also available to provide estimates and help you stay within your budget.
If you are very handy and know what you’re doing, your team may be small and only include the real estate agent. Don’t underestimate the importance of a good agent. They know the market well and are professional negotiators.
Find Your Property
You’ve educated yourself, done the research, and built your team. Now it’s time to find a property to flip. The following list has some tips to keep in mind when you’re house hunting for the perfect flip:
- Narrow down your market. Allow your real estate again to do the leg work for you by finding an area with the demographics you seek, where houses sell quickly, and the neighborhood is a desirable one.
- Consider short sales. Short sales scare away regular buyers who don’t like the sound of a messy situation. For the house flipper, however, short sales mean buying a home under market value. Choose a real estate agent experienced in short sales.
- Consider auctions. Auctions are usually foreclosures. Again, these sound messy to regular buyers, so they often shy away from them. For the house flipper, an auction may mean a great price for a fixer-upper.
- Make a realistic offer. You may already be getting a great deal if it’s a short sale or auction, so stay realistic. Don’t offer too low and get kicked out of the game. Calculate your return on investment (ROI) using a few possible scenarios and go from there.
- Buy the house on the lower end of the neighborhood. In a beautiful neighborhood, don’t choose the house that’s the biggest and the best. The house in the lower price range in a sought-after neighborhood is the one that sells easily. People are eager to get into a great neighborhood for a decent price.
One thing to remember when searching for your property is that an auctioned home or a short sale often means the home is neglected. This isn’t usually a problem for a flip, but it’s something to be aware of. Severe neglect could mean intense rehab.
Flip the House
Finally, it’s time for the flip. Here’s a little advice to help you stay on track:
- Create a budget and stick with it.
- Tackle structural issues first.
- Take your contractor’s advice.
- Keep things neutral for the buyer.
List Your Home
Standing back and seeing the progress you’ve made on a flipped house feels great. Once the home is complete, it’s time to call your team member, the real estate agent, and get the home listed. Your agent can sell a home quicker than if you try to sell it yourself. They’ve got the resources to find buyers.
Look for a profit. But, just like offering on a house when you were buying, be realistic about what you will and won’t accept. The flipped house is your pride and joy, the result of hours of sweat and labor. In the eyes of potential buyers, it’s one option among many.
Is House Flipping for You?
Now that you’ve seen what house flipping entails, is it for you? It’s a great way to begin or continue investing in property, but it isn’t for everyone. There’s risk involved and a lot of work. Still, in all areas of life, there’s no profit without risk.
Flipping a house is quite an adventure, and when done well, it’s an investment in your future.
At Excalibur Homes, we specialize in real estate investment, as well as Birmingham property management. Excalibur Homes was voted “Best in Georgia” due to our passion and knowledge of the industry. Contact us for all of your real estate investment needs.