With all the new forms of alternative lending and mortgage financing options, there are real opportunities for almost anyone to invest in a house that can then be flipped and resold. If you’re thinking about trying your hand at this crafty form of real estate investing, here are five things that all house flippers need to consider before making a purchase.
1. Realistic Costs
It’s easy to get caught doing bad math when you’re looking to buy and sell a home. The house might cost $349,000, and you’re sure that you can sell it for $419,000. While that looks like a profit of $70,000 to your eyes, it doesn’t take into account all of the expenses that come with fixing up the house you plan to sell and the various fees that will go to brokers and other agents. Don’t cheat yourself out of money by glossing over the actual expenses.
2. Target a Buyer
You don’t have to have a real person in mind when you’re renovating the house, but you should definitely have a type of person in mind. Good house flippers flip with purpose, designing and upgrading a house so that specific people will take notice and become interested. That kind of planning will make it much easier to resell.
3. Track the Market
If you don’t know what’s going on in the rest of the real estate world, you could put hundreds of hours and thousands of dollars into fixing up a house that isn’t fit for the current market. Make sure you’re aware of what other homes are selling for and don’t spend too much renovating a house when the market is weak.
4. Price Fairly
You may want to stick a huge price tag on the house you’ve flipped just to see if anyone will bite. If you start too high, you could scare off potential buyers who might never come back. You’ll be better served offering a realistic price and hoping that there are enough interested parties to drive the biding up.
5. Know the Codes
When you’re designing a house for the first time, it’s easy to get caught up in your exciting and innovative ideas. As good as those thoughts might be, you still need to make sure your construction practices don’t break any laws.
When house flippers successfully turn around a home, they usually have a lot of fun doing it. If you’re interested in trying it out yourself, make sure you know what you’re doing before you start.