Are you looking to flip your first home, or just looking for tips to land you a better deal?
Research done in 2017 shows the average gross profit of a deal being $66,448 per flip, I’m sure anyone would get excited. House flipping sounds like a dream for a lot of people.
What could be better than working for yourself? Homes are expensive though, and you may think that there isn’t anything you can do to bring that cost down.
Believe it or not, there are many ways to make it more affordable. There aren’t any hidden secrets. That’s what this post is for.
Keep reading below to learn our tricks for landing a more affordable deal.
What Does House Flipping Mean?
House flipping is the process of purchasing a property at a low price and then reselling it for a higher price in the future. There are several ways people go about this.
- Buy a distressed or foreclosed property and repair it to increase its value.
- Find a new neighborhood and invest in a home there in hopes that the value increases in the future.
- Find the runt of the neighborhood and improve it to match the market value of its neighbors.
Each of these has their skill set and risk associated with it. You can sit on a potential flip from anywhere between two months to a year.
So how do you get started?
1. Find a Good Location
It may not seem like it, but there are still good deals everywhere.
All across the country, new neighborhoods are coming up in areas with a lower cost of living. You can take advantage of this by doing your research and identifying these lower profile areas.
If you find a neighborhood that has a high number of homes for sale, it could be a sign for a depressed local economy. The chances are good that there has been an increase in crime or other problems in the area, and people are leaving.
You can find studies, like this one done by Fortune, which will show you the up and coming regions where house flippers are seeing a lot of success.
2. Find a House That is Below Market Value in the Local Market
Have you ever drove through a great neighborhood and looked at all the great houses there? I’m sure you can pick out all the most valuable homes there.
How about the worse house in that neighborhood though? That is what you need to find.
Buying the lowest performing house and bringing it up to par with the rest of the crowd is a lot easier than buying an already optimal home and trying to improve the value of that.
3. Make Sure There Are No Surprises
Inspect, inspect, inspect. You don’t want to have a random problem pop up that is going to costs you thousands of dollars to fix.
You can keep your costs down by taking the effort up front to make sure any repairs or updates you need to make are minimal. To help with this, here are a few things that you should avoid:
- Any roofing replacement
- Any house that has mold
- Any wiring replacement
You aren’t always permitted to do an inspection when looking into a property. You need to develop a good knack for spotting issues like this or have someone with you that can see the things you don’t.
A good rule of thumb is to add 20% to your estimated renovation cost to be on the safe side.
4. Find a Good Contractor
If you are on a budget, then you may want to take a DIY approach.
While this can work for many things, don’t make the mistake of doing it for everything. A good contractor will be able to help you avoid mistakes that will cost you more money in the long run.
A contractor like Solid Arc Construction will ensure that you don’t go over budget and save you time getting the renovations done.
Try to find your contractors before you get started. The longer it takes to get your repairs and renovations done, the longer you have a house sitting and costing you money.
5. Flip Faster By Keeping Up Appearances
Are you finished with your improvements, but having problems getting your property to sell?
A house sitting on the market can be costly. You have utility bills, property taxes, mortgages, and insurance. The longer it sits, the less profit you are going to make.
Luckily, you can work to increase your curb appeal to help get eyes on your flip and help move it faster. Keep the following in mind:
- Trim down any overgrown shrubs.
- Use container plants to give the yard some color.
- Keep the lawn mowed.
- Make sure the driveway is correctly paved and looks great. If it is dirty, then take a power washer to it and clean it off.
- Lay fresh mulch on flower beds to make it look fresh
- Add potted plants to any patio areas.
Using these tips not only helps sell your property faster, but it can also help increase the perceived value of the home so you can sell it for more.
You can also take a look at our home tips to find more information about home improvements you can make.
It’s Time To Take Your Next Step
Now that you have some tips to help you keep your costs down and profit high, you probably want to jump right in.
Never forget though that house flipping is a risky venture. Make sure you do your due diligence before buying to ensure you come out ahead.
Do you have tips of your own that could help others? Let us know below what your process is so we can make sure everyone comes out ahead.