House flipping is not always turning huge profits, sometimes it can get you into trouble – you buy a house, renovate, spend all your money and then nothing. You cannot sell it but have to pay a lot of money on taxes, mortgage (if you didn’t pay for it in cash) etc. This is a clear recipe to disaster.
Ideally, you should have cash at hand. Even if you don’t pay for the house in full, having enough money to last you during repairs and until you can resell is gonna help you go through any possible bad times.
Don’t Over-Improve On It
I know you’d like to make it perfect, but, if similar houses in the area sell at a price, there’s little chance to sell it way over that price. Say you’d like to get $400,000 for a house in an area where most houses sell for about $200,000 … not gonna happen too easily.
So, instead of over-investing on all kinds of expensive features and finishing, make sure the house looks good and keep your money for another flip.
Invest in a nice kitchen/bathroom (nice, not overly expensive) and make sure everything else works flawlessly – anything that’s gonna be checked during the Homeowner’s Inspection.
Know your target market well and renovate with them in mind.
If you are selling to single people, you’ll need to provide some improvements, if your target market is families with children, think about what these people need the most.
Being able to provide your target customer with the exact features they’ll appreciate the most is a sure way of selling your flip house faster and get bigger profits.
Don’t just presume people will line up at your door to buy your houses.
If you are seriously into this, invest a bit of money on a website, run a real estate blog and promote via social media. With as little as few hundred bucks you can get a promotional system in place that will get you more business leads.
The more people you can get to be interested in what you sell, the easier it will become to grow your house flipping business.
Don’t Overprice Your Property
So you got the initial house, made it gorgeous and are now looking to get the money rolling in.
If you price it lower at the beginning, you’ll attract way more potential clients. The more showings you have, the bigger chances are to get a few clients who are very interested in the property and are willing to bid for it.
Make a Great First Impression
We all know it’s not OK to judge a book by its cover, but we’re all (secretly) doing so. Why would it be different in the real estate world?
Make sure that the first impression a potential buyer gets is a good one.
Garbage, unkempt bushes and dirty yards make a bad first impression and can drive away a good customer (or drive the price down).
If all flip houses look the same, it’s more difficult to get a buyer for them, since they are boring. Why not try a new more beautiful color in the living-room? Maybe a new type of tiles in the kitchen. A nice door in the front of the house?
This doesn’t have to cost you extra, there’s a lot you can do within your budget but give your house a ‘wow factor’. Something that makes it really stand out.
It’s not a flip since we plan on moving there when we retire and spend most of our weekends in until then, but most rules apply here as well.
We have done some of the wall painting ourselves, I am becoming increasingly good with working on reclaimed wood (we have some delightful one-century old beams I have personally revamped, now we’re working on an old door etc.) and husband is doing a lot of the work needed for the house.
And yet we have a professional do all our plumbing and another one who’s done an amazing job with plasterboard.
In order to cut some of the costs, you might be tempted to try and do ALL the work yourself. But it can turn into an expensive disaster: you can ruin something or it will take way too much time to be worth the hassle.
Choose Cash Over Finance
If you get 2 similar offers and one is a cash offer while the other one a finance offer, it’s not a bad idea to go for the cash.
Even if you ‘lose’ a little, this is money you can get hold off IMMEDIATELY and use for the next flip, while a finance option, even if it seems a better deal, will take effect later.
Of course, if you already have a good cash cushion and can enter the next deal immediately, you can wait for the finance offer to take effect.
Flipping a house shouldn’t take too long. Make sure you can start work on it as soon as possible and try to finish the repairs and improvements in a timely manner.
Any additional time you waste with the property means more taxes to be paid, more work to be done on it, maintenance costs going up.
The faster you can flip it, the faster you cash in your profits and can move to the next deal.