We all know about the record prices homes are going for. Although, on the flip side, house flipping may be highly competitive, there are still huge profits being made.
People will tell you flipping is ‘a-walk-in-the-park’ easy. Don’t you believe them. Yes, for the hard working experienced flipper, there are big returns to be made, as long as you stay cool and calm at all times.
Look around your market and asses its value. Every area has its average, high and low. Without getting yourself into a twist, bear in mind that past records will have to be adjusted to fit the current prices. Consider, as far possible, to use recent prices more to get a realistic, existing market value and work from this. Otherwise, asses your area for trendiness and if it is trending, that’s what you want. Do the math before flipping and see if you will need to buy to rent or hold for a while and make an even bigger return as your market area takes off. If your market is highly competitive, it may be more profitable to do a fast style renovation getting your purchase back on the market quickly.
Cost your project
Before you buy, assess yourself and determine the risks you are prepared to make, even if it hurts. When you have arrived at a figure, see that you have left yourself a sufficient margin for risk and you’re ready to map out your financial plan.
At your project’s site, write out your financial plan (in long hand) while walking around the premises. By doing this, you will save yourself a lot of surprises. Planning like this, forces you to make two separate entries of your financial assessments, one on paper and one electronically. This will give you two valuations without much extra time cost and you can double-check your facts and figures.
Don’t overprice whatever you do, overpricing is still overpricing. Remember to keep your cool at all times and don’t let your passion for your work interfere with the profit margin. Keep to the facts, like market price in your area and stay with your original plan. Even be prepared to lower your price rather than have one investment sitting on the shelf, losing you money.
Renovate for your buyer
Good counsel for property investors is, “buy the neighborhood not the house.” And, it stands to reason that you should have a policy to “sell the neighborhood and not the house.”
Naturally, this means your house should take on the character of the neighborhood you are flipping in. This fact will keep you focused on how grand, how skimpy or how different you need to be to fit the style of the community.
Young families and schools mean family homes prevail, whereas if it’s a retirement area, you are renovating for the elderly. This gives you two very distinctive types of flipping. The family friendly neighborhood will require modern and up to date fittings and lots of outdoor space and houses where stairs are no problem. For the elderly, you need simply the opposite, like no stairs, a small but spacious home with a small or no-garden situation.
Here you can see how different your approach can be. Be specific when buying and keep to what you know or what you are happy to work with. Keeping this fact in mind will make life less rough when entering the flipping market.
Buyers do not come pre-trained for every occasion. Now, it’s the seller’s (you) chance to make good on all your hard work if you play your cards right and educate your buyer.
Make a list, like the hard copy you did before, using pen and paper. Reveal everything you did to get that house up to its current fine condition, the structural problems that were repaired, electrical faults brought back to standard or replacing the HVAC. Show the buyer all the before and after photos that you have taken.
Your buyers should be in no doubt as to the improvements and you must point them all out. Lay out the documents with warranties that came with the alarm system, the new sound system, lighting controls and all new appliances or fixtures. Don’t leave anything of value out.
You have worked hard and deserve your reward, so show your buyers what a diligent home developer you are. You never know if they may need your skills, so give them your business card even if they don’t buy. Dale Carnegie believed advertising always paid.