Are you thinking of flipping a house? Although it might sound easy enough, the reality is that this is a huge undertaking. As with any other business, you’ll require knowledge, skills, and planning to see success. Here are five things to know about flipping a house.
1. You Should Study the Homes for Sale in the Area
It’s important to know the market in the area where you’re buying a home. Search for Orlando, Boston or Playa Vista homes for sale to get an idea of what prices houses are currently going for in the region you want to flip in.
Keep in mind that if a home price seems too good to be true, it probably is. You’ll want to make sure that you’re making a wise investment rather than investing in a pricey fixer-upper that will cost more than it’s worth in the long run. Be sure to watch out for red flags in real estate listings. For example, if a home is being sold “as-is,” it’s probably not worth your time.
2. Know What Repairs You Can’t Do Yourself
Although it would be amazing to flip an entire home on your own, the reality is that you might need to hire a contractor. If you’re not familiar with electricity, for example, you might need to hire an electrician.
One of the biggest house-flipping mistakes people make is not having the skills or knowledge it takes to be able to do all of the home repairs. It’s important to be realistic with yourself — while also recognizing that hiring a contractor can be costly and, ultimately, may lower your Return On Investment (ROI).
If you do need to hire contractors for your house flip project, it’s ideal to take them to tour the property ahead of time. Getting quotes for repairs upfront will help prevent you from running into any unexpected costs from contractors later on, allowing you to decide if the investment is worth it.
3. Crunch Numbers Before Investing in a House to Flip
Before you make the decision to flip a house, it’s important to do some number crunching. Consider how much it will cost to make home repairs and how much you can sell the house for once the project is completed. You’ll want to make sure that the money you can potentially earn from the project will be worth it — even with any work you’ll need to contract out.
4. Stay Away From Homes in Need of Major Improvements
If you’re planning to flip a house, your best bet is to choose homes that are only in need of minor repairs. Some of the easiest updates that can completely transform a home include laying down new flooring, updating kitchen cabinets and countertops, investing in new appliances, and applying new paint and re-trimming.
You’ll want to stray away from homes that aren’t structurally sound. If a house needs a new roof, this can be very costly unless you are a carpenter yourself. Homes that have cracked foundations or might be likely to contain mold can also become money traps that you’ll want to avoid if you’re looking for an easy ROI.
5. Be Careful With Foreclosures
Foreclosures can be hit and miss when it comes to house flipping projects. Although many foreclosed homes tend to be in good condition and need minor repairs, it’s also a risk you’re taking when you purchase a home through an auction. You generally won’t be able to have the house inspected, so you’ll want to make sure you choose homes that appear to be structurally sound.
These are just five things to know about flipping a house. Making the right decisions before you even invest in a home can go a long way when it comes to seeing an ROI in the long run.