Fix and flip also know as ‘renovate to sell‘ ventures are top of mind for many entrepreneurs, but this professional endeavor isn’t as easy or clear-cut as many television programs would have you believe. Fixing up an old, dilapidated house and turning it into a dream residence is much more difficult than one might anticipate—and doesn’t always offer the profits promised by the numerous “overnight successes” you’ve probably seen in your research. That’s not to say that pursuing a career in home flipping is a pipe dream—it just takes a great deal of determination, plenty of elbow grease, and a tiny bit of luck. Consider these fix and flip dos and don’ts before you head out to purchase that fixer upper.
Fix and Flip Dos
Do: Buy the Right Home
Picking the right property is a crucial part of the process, and can make or break your success in the home flipping industry. Your first priority: location. Consider the neighborhood, crime rates, proximity to amenities and public transportation, school district—will this appeal to your target buyer? Also assess the physical characteristics of the rehab property; the ideal fix and flip home is similar in size or bigger than other homes in the area, but not overly big—buyers won’t buy a mansion if it’s surrounded by shacks. Avoid buying a home sight unseen during an auction, at least for your first fix and flip venture, because even experienced flippers can be taken aback by the challenge of a sight unseen property purchase.
Do: Hire a Professional to Tackle Repair Work
Demolition sounds fun, but there’s more to a fix and flip than taking a sledgehammer to the wall. Find a trusted contractor before touring any property; this individual can help you estimate the cost of repairs immediately—before you’ve invested hundreds of thousands into a fix and flip home.
Do: Hire Stagers to Make the Place Look Its Best
Once the house is ready for viewing, make sure you hire an experienced and reliable stager to ‘dress your home’ with furniture and knick knacks. Staged homes typically sell at a much faster rate than vacant homes. This small investment could see you pulling in thousands more and selling your home faster—a must when it comes to fix and flip ventures.
Do: Price Your Home Correctly
You’ve put in the work and you’re proud of the transformation you’ve seen in your very first fix and flip. Don’t let all that work go to waste by pricing your listing too high or too low. Do your research to figure out the sweet spot for your fixer upper. You lose money every day the home is left on the market, so price it competitively and get it sold in a jiffy.
Fix and Flip Don’ts
Don’t: Forgo the Right Financing Methods
The promise of profits isn’t airtight, and you need to consider that as you search for a property to purchase. To get started on a fix and flip, you need cash up front. If you don’t have the personal capital to put forward, you’ll likely need to pursue funding through alternative means—as traditional lenders and banks aren’t apt to give a loan to an inexperienced flipper (or an experienced one for that matter). Depending on where you live, you may consider private lending. New York flippers might have to pursue financing from Rochester hard money lenders, while a California flipper may choose to request money from an angel investor.
Don’t: Blow Your Budget Out of the Gate
You’ve purchased the house, assembled the team, and you’re ready to get started—don’t blow your budget on the first day in the wake of your enthusiasm. Stick to your budget by moving quickly but efficiently. Find coupons, shop for material deals, and set aside some money in the case of an emergency.
Don’t: Buy Every Finish Under the Sun
Not every home needs marble countertops and bidets in the bathroom—and not every homeowner is willing to pay for such luxury finishes. Know the neighborhood, consider your target buyer, and pick finishes sparingly.
Making your mark on the fix and flip industry isn’t easy, but these dos and don’ts can have you on your way.