Flipping Houses

Flipping Houses

Balancing Risk Against Reward: 5 Guidelines to Keep in Mind When Flipping Houses for a Profit

Real estate is always an intriguing topic for young professionals, whether you’re looking to purchase a house to live in, thinking about becoming a landlord and renting out your house or slightly more advanced – flipping a house. Flipping a house involves buying a fixer upper, quickly fixing it up, and hopefully selling it for a nice profit. Flipping houses requires time, energy, knowledge, and perhaps a bit of luck. It’s certainly not for beginners and you’ll want to make sure you do your homework. You can (and should) always learn more about flipping houses and the real estate market if you’re serious about it. Before getting too far into researching, let’s review 5 guidelines to keep in mind when flipping houses for profit:

  • Have a good support team
  • Focus on cosmetics
  • Have an idea of the cost of the flip
  • Take time and plan your renovation (and know it may take longer)
  • Have money for unexpected costs
Photo by cetteup on Unsplash

Have a good support team

When deciding to flip a house, you need to have a good team of supporters behind you. The more you know, the more you grow. It helps to know and have friends or acquaintances who are contractors, real estate agents, lawyers and inspectors. Or even get recommendations from others that have used vendors like them before. These people will give you great advice and make sure that you are doing what you’re supposed to do in order to have a successful flip. Take advantage of the people in your circle and put them to use.

Don’t just focus on cosmetics

A successful flip involves quickly repairing/fixing a house and being able to sell it for more than you paid for plus the money (and time) you put in. Know that with a little handy work and elbow grease that cosmetic fixes are pretty easy. If you’re able to do some of the work yourself, even better! However, deeper problems like: electrical, roofs and foundation problems, will result in you putting more money into the house than necessary to yield a healthy profit. A good buddy of mine didn’t notice some major foundation and septic tank issues which really set him back spending a lot more than intended. Get a good inspection and know what you’re getting into.

Have an idea of the costs of the flip

Definitely as best you can estimate the cost of repairs/improvements before pulling the trigger and buying the house. Remember that a good flip requires you selling it for more than you buy + repair/improvement costs. So, correctly estimating the costs (including realtor and real estate lawyer fees) will go a long way in helping you decide if a house is worth you time. Spend some time researching home prices in your area, and what repairs normally cost. Don’t be afraid to ‘pretend’ and make a few calls!

Take time and plan the revnoation carefully

As with any construction, it’ll probably take more time and more money than initially planned for. Definitely make sure you have enough money and time set aside. If you’re new to flipping, make sure that you don’t get in over your head by trying to do something expensive and extravagant. Assuming you’re borrowing money via a home loan for the flip, make sure you get ahead of that and start the process early. As with most things in finance, your budget is one of the most important aspects of it!

Have money for unexpected costs

When flipping houses, there is always something that may (may just be better to say will) come up that was completely unexpected. You can create the best budget and still have an emergency of some sort that you didn’t foresee at the beginning of the project. The best thing to do is add some cushion to your budget for emergency purposes, that way you stay on target and your renovation can continue to move forward without any issues. 

Flipping houses isn’t for beginners but with good planning, good research and a willingness to spend time and money, it can be profitable!

Disclosure: Some links are affiliate links that may earn me a commission. I am recommending these companies based on my research and/or experience and truly think you would benefit from them, regardless of any commission I may earn.  

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