1. Don’t Pay Attention to the TV Shows
While it is great to see what can happen (including what can go wrong) with a house, know from the beginning that the numbers on TV are not accurate. There are repair budgets I have seen that I haven’t even been close too in more than 4 years. Remember that these shows are for entertainment and not the foundation for building a business.
2. Don’t Only Work on a House With Someone You’re Close To
While finding a run down house with a spouse or friend to fix up yourselves in your spare time sounds fun think twice. The problem is that minimizing the financial impact of this decision can leave you in a bad spot…with the house and the partnership. To set yourselves up to succeed you need to align yourself with someone (or multiple people) who have experience. Then, work with them. Your best bet may be a realtor who has a strong grasp of what sells in the area. They will know what properties are worth, as well as be able to snag good deals when they first become available. Even better, they may have bought their own rental properties in the past and even flipped their own homes.
You may also want to work with a contractor or someone who is very heavily into real estate. They can tell you what repairs a house will need before you ever commit to the property. Otherwise, you could very easily find a problem (or many problems) later and spend tens of thousands of dollars above budget.
The initial assessment before buying a property is where your money is really made – or lost. Trying to guess what repairs a home will need, if you don’t have experience in that area, could be a VERY costly mistake. Not knowing the area, the market, or how much a home could sell for once it’s rehabbed could be an equally costly mistake. You absolutely must work with someone who knows what they’re doing.
3. Don’t Be Afraid to Walk Away From a House
Buying a house to fix, renovate and sell is a big decision. Don’t feel pressured to make an offer on the first house you find. There will always be “deals” despite what you may hear. Once you own that house everything that happens affects you. Making this decision quickly or without feeling comfortable can make all the difference when it comes to your profit.
Looking at several houses before you submit your offer will show you what is out there and how the market looks in the area you want to buy in. With this information you can better analyze whats going on and make an informed decision when you do find the right house.
4. Don’t Overpay for the House
As an investor you make your money when you buy the house. It is easy to increase your offer when there are multiple offers or if you are purchasing the property through an auction. Sticking to your numbers and not getting caught up in the competition will help make sure your offer is sound and profitable.
Remember that the key to your success in house flipping can depend on who you are working with. Creating the right connections and making sound decisions when you are buying are not only amazing for learning they are also necessary to achieve a flip that is profitable.
So you’ve purchased a house to flip. Now what?
Want to buy a property and renovate it?
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