Thinking about flipping houses? It seems simple enough—find a property, fix it up and sell it for a significant profit. At least that’s how reality TV shows portray it—not only as a lucrative but also extremely fun process. While in reality it may not be as effortless as they depict on television, it’s definitely doable as long as you keep the following in mind.
Plan and Budget
First and foremost, go into it with a plan and budget in mind. Flipping houses can take anywhere from months to years, and unfortunately, there isn’t an exact timeline on these endeavors. Be realistic when thinking through the logistics and give yourself a buffer with extra time and money. Often, there can be delays or unexpected costs associated with any fix-and-flip project, so avoid the common mistake of underestimating everything it will entail.
While timing can be tricky, anticipating the costs of repairs and upgrades can be even more confusing. However, it’s essential to have an estimate of how much you can expect to pay. And keep in mind, even the small tweaks, like a fresh coat of paint or updated hardware, will add up, so take the full scope of work into account. Once you have your full budget as well as an estimate of repairs and upgrades, you’re left with the amount you can spend on the property itself.
Find the Right Property
Remember, flipping houses is a business, and in order to limit financial risk and increase earning potential, you must minimize costs, starting with the property itself. This makes foreclosures and auction properties a potentially ideal option, as you can sometimes snag a property at a discounted price. Plus, if you opt for a cash-only purchase, you’ll avoid draining money on interest. However, keep in mind that many foreclosure or auction properties might require repairs and upgrades before you can flip it. It is crucial to these costs and not just consider the purchase price alone.
In addition to the price, location matters, too. You can consider investing in one of the top markets across the U.S. or a neighborhood where reselling is less likely to be a challenge. Take all factors into consideration—from neighborhood demographics to buying and selling trends in the area. When in doubt, you can find relevant property details on Hubzu.
Renovate and Update the Property
Once you have found and purchased the property, it’s time to start renovating. Remember to be strategic when picking and choosing which updates to make. While you may have several ideas, you don’t want to spend more than necessary and go over budget. Be selective and opt for the updates that will make the most valuable enhancements. Don’t spend too much on something that won’t bring value. The key is small, inexpensive touches that can really turn the look of a property around. Think: lighting, kitchen faucets or updated bathroom details.
Flipping a property is a time-consuming task with numerous moving parts—from construction to re-modeling. Therefore, you must be strategic in finding the balance between do-it-yourself and hiring help. While doing it yourself can save you thousands, be realistic with what you can handle and don’t overestimate your abilities. On the flip side, hiring help for all updates will increase costs significantly. Use your judgment, keeping your skill set and budget in mind, and decide how much you can handle and how much you should outsource.
And, don’t just hire the first contractor you meet—lean on your network, ask for referrals, and vet the candidates to find contractors that are both trustworthy and reliable.
Resell Your Fix-and-Flip & Reap the Profit
After the updates are finished, you’re ready to sell at an increased price based on the property’s updated look and feel! While some investors are ready to sell as soon as the house is ready, others don’t mind waiting for fluctuations in the market for an even more significant profit. The decision on when to sell is extremely situational, based on the current state of the real estate market and your unique circumstances. While weighing out your options, remember, the longer you have ownership, the longer you are responsible for any costs associated with the property, like property taxes and insurance. Take everything into consideration before selecting your course of action. Unfortunately, there are times that no matter how much you plan, you run into problems along the way. If this happens and you’ve determined that selling the property quickly is your best option, you can register for Hubzu’s Signature Seller Auctions and market your property on the Hubzu.com auction marketing platform.
While flipping houses isn’t for everyone, if you have the time and money to dedicate to it, it can be quite lucrative. If you’re up for the challenge, let’s start by finding the right house.