It sounds simple and fun: You buy a house in bad shape at a cheap price, fix it up, and sell it at a huge profit. But is flipping a house really as easy as it looks on TV? No.
A successful flip requires a lot of back-breaking work and cash. If you don’t know what you’re doing, you can easily wind up in over your head and out of money.
Here are some tips for flipping houses and turning a profit.
1. Find the Right Location
Location is everything in real estate. If you pick a home in a bad location, you’ll have a hard time selling it – period.
Find homes in desirable neighborhoods or a growing city. Do some research to find these areas.
Here are some things to look for when doing your research:
- Rising real estate sales
- Employment growth
- Good schools
Another thing to consider is the home’s location in proximity to your own home. Sure, you may find a home in a desirable neighborhood that’s two hours away, but do you really want to drive that far every day or every weekend?
If you hope to get the home back on the market in the near future, you’ll need to work on it every day or, in the very least, every weekend. If the house is too far away from your own home, you’ll spend more on gas and it will take longer to fix the house.
2. Find a Mentor
Everyone has to start somewhere, but if you jump in blindly, you’ll make a lot of costly mistakes that could have been avoided if you had a mentor.
If you personally know a successful house flipper, ask for advice. Consider giving incentive for the mentor’s guidance and help, such as a percentage of the first home’s profit.
If you don’t know any successful home flippers, hire one or enroll in a program. BREIA, rated one of the best real estate mentors in Florida, offers a real estate mentoring program.
3. Analyze the Repairs
Very rarely do flippers find homes that don’t need repairs. But it’s important to analyze the extent of the repairs before making an investment.
There are simple repairs, and then there are costly, extensive repairs that only experienced flippers should take on.
Simple repairs might include:
- New carpet
- New paint
- Replacing old kitchen or bathroom flooring
- Replacing doors
Extensive, costly repairs might include:
- Mold remediation
- Roof replacement
- Electrical rewiring
Make sure that you know what types of repairs you can handle before you start looking. Experts also recommend adding 20% to any estimates that you may receive, as you’ll always wind up spending more than you think.
Also, pay attention to the kitchen in the home. The kitchen is the most important room in the house, and successful flippers say that you should focus on remodeling this area first.
4. Check the Home’s Value
Successful flippers only purchase homes that are priced below their value. It’s better to buy the worst house in a great neighborhood than to buy the best house in a lousy neighborhood. Remember, the value of the surrounding homes will affect the sales price of the flipped home.