House Flipping ....What to do what not to do?

Question

So lately I have been looking into house flipping, sounds like usually you pick a house that needs some cosmetic repairs fix it up and sell it to make a profit. What are some good tips to do, and what are somethings I should make sure dont happen?

Answer 1

It is important to have some sort of background in construction/home repair before you get into flipping. This will help you know what needs to be done, what sort of timeline you can expect, and how much a contractor will charge to do the job. I have seen people without any background in construction flip properties, but they often get taken for a ride by contractors. This even applies to cosmetic flips only, as you will ALWAYS have unexpected technical issues come up in older homes.

Look at your numbers carefully before making an offer. Find comps in the area to determine a realistic asking price, estimate the cost of all repairs, and add in holding costs for six months, and tack on an additional 25% of your estimated budget for unexpected costs. Once you come with this amount, subtract if from the estimated asking price. For instance, if you see a house that could sell for $120,000 and you determine that your cost to get it sale-ready is $14,000, that leaves $106,000. If you want to make at least $10,000 off of the flip, you will want to offer no more than $96,000 for the property. So offer an amount that will make you your intended profit, and not what you necessarily think is fair.

Always list with a real estate agent. So many flippers try to sell for sale by owner or through marketing tricks, and they just don't work. You may have to pay a commission, but it is much cheaper than holding onto a house for 6 months waiting for the right buyer to stumble onto you (and no, I'm not an agent).

Last, keep an eagle eye on the worksite. The biggest mistake I see new flippers making is underestimating the amount of time it will take to flip the property. Sometimes this is just due to inexperience with setting timelines, and sometimes it is because they are not carefully supervising the worksite to make sure the contractors are showing up and staying on task. If you plan on doing the work yourself, make sure you add on at least a week to your estimated timeline as conflicts will usually come up.

We have made MANY mistakes flipping properties over the past ten years but as long as you learn from them, it can be a rewarding career. Good luck!

Answer 2

Make sure the market is going up---more buyers than sellers and house you're going to flip is in good location----very important. Building wise, have it inspected very, very thoroughly for any major problems like bad roof, water damage or leaks, insects, termites, bad foundation, bad wiring, etc....anything that will take major dollars to repair. What you want is something that's generally in good shape and only needs cosmetic improvements like paint, new fixtures, carpet, flooring, cabinets, yardwork or landscaping,etc... Inspection is critical if you're not familiar with building repairs and codes. Plan a budget for repairs and stick to it...plan a timetable for repairs to be done and pick a good time of the year to sell when the market is up. Figure how much profit you expect to make and realize that the selling process is a game of nerves and resolve and market factors. Do your homework on what the comps are in the area for the house you're interested in.(Comps are houses of comparable size, number of rooms, features and value that sold in the last 6-120 months) Get the best price you can on an agent's commission or go directly through a broker---3 to 6 percent is normal range but they all do basically the same work---listing the house on MLS, open house, agents open house, taking pictures---virtual tour is very important to a lot of potential buyers.

Answer 3

This is a much tougher time for house flipping than in the past in most areas. You really need to be patient, take your time to find the right homes, make sure you are looking at the homes with someone that is very experienced in home repair and do your "homework". Below are a few links with some good information about house flipping. Good luck to you as this can be a very lucrative business if done properly, but it can also be a money trap if not done right.

Answer 4

The biggest thing to look for when buying a home to flip is to make sure that it has a good foundation.I have seen people buy homes to flip only to find out that the whole foundation needed replaced costing them thousands of dollars.One more thing always buy the worst house in the nicest neighberhood.

Answer 5

The main thing is to buy it right! It's not as easy as it sounds and you need to do your homework. Make sure the neighborhood you buy in sells well and you need to buy under price.... way under price....

Answer 6

I found this free guide on house flipping below. It may help you.