Tips For Success
Work with a team, don't try to go it alone. Find a real estate agent, lender, and contractor that specialize in finding, financing, and fixing rehab properties.
Do your due diligence before you buy. Study the market and the neighborhood you want to work in. Your real estate agent will provide you with this information, and ask them for the documentation to support the data. Get pre approved by a lender and be sure they understand your intent to flip the house. Have your contractor work up estimates. Mistakes with any of these can effect you bottom line.
Build in contingencies. You should always add 10% to your estimated remodeling costs. If the deal is too “skinny” and does not allow room for errors, it is probably not worth doing.
Only buy properties that will be similar to the other in the neighborhood. In other words, don't over improve the property with upgrades and additions that would make the house much more expensive than all the others in the neighborhood. Also, make sure the house conforms to the other homes in the neighborhood, like mostly 3 bedroom 2 bath homes as an example.
Monitor your budget and you go along. You need to know immediately if you are going over budget so you can compensate for the additional expense and still achieve your profit goals. |
Be sure to use a contractor that knows the difference between a load bearing wall and non load bearing wall. If you remove a wall between the kitchen and living room that is load bearing the roof might come down.
Be sure to include landscaping in your budget to improve the curb appeal. Put in bright, colorful flowers. Make sure the front door is new, or looks new and opens and shuts without sticking. Add a new mailbox and address plaque. Replace the porch light with an attractive fixture.
Understand your target buyer. For example, if you are fixing and flipping in an urban neighborhood, with young professionals as your target buyer, typically they are seeking modern fixtures and cabinets, granite countertops, stainless steel appliances, travertine tile, etc.
Purchase the building materials yourself, unless the contractor can get them for a better price. You are often paying for the contractor's mark up on the building materials.
If you are not actively involved in the project on a daily basis, then be sure to check in at least once a week to check on the progress. This is your investment, not the contractors. Make sure they are keeping to your time schedule for completion so you can get the house back on the market and sold.
Keep notes of your successes and failures to you don't repeat the same mistakes. |
