This week is the second in the new January blog series designed to help you get traction with flipping successfully. If you want to know if you’re ready to flip you can check here. Before we get into some of my best tips as a reminder there three simple steps to every single house flip. While there are many ways to look at this point there is also a very simplistic way to break it down. At the heart of flipping a house there are three definitive and non-negotiable steps:
- find an undervalued house
- renovate the house by making improvements and increasing the value
- sell the house for a profit
Getting through these three steps will take some time but you can definitely increase your potential for success. Here are the steps that after more than 200+ flips I’ve regularly used to grow a full-time business.
1. Look at as many houses as you can
Even when you are not looking to buy look at houses. It is the number one way to learn. Because it is the only way you will see the differences between them and know which ones are good finds and which ones you should pass on. Learn about neighborhoods, school districts, price range, what styles of homes are desirable in which neighborhoods. One of my ultimate time savers is to look at the aerial map view of a house. Knowing if there are apartments or commercial buildings nearby can help you narrow down the properties that you want to walkthrough. If you’re looking in areas where you may be finishing new spaces like attics or basements make sure you (or your agent) know the required ceiling heights to finish those spaces for usable square footage. And always have a tape measure with you
2. Decide on the level of flip you want
When I was getting started the majority of my projects were 8-10 weeks. I wasn’t reconfiguring spaces and taking out walls. They were very simple. I may have installed new kitchen cabinets but we kept the existing layout. I was installing vinyl flooring and painting. Keep in mind, I had zero experience so these types of project allowed me to learn the process, hire (and fire) contractors and learn how to advance design and renovation. If you have a background in these areas you may be more comfortable tackling an addition or what I would call a level 3 flip. I’ve also seen people who’ve been contractors and worked on projects for other investors. That level of experience can certainly allow you to take on more. Something to always consider is the time required for the project. When you are just getting started taking on a home that needs an addition and a new garage built is going to add a lot of time and expense to the renovation budget. There’s no need to take on a huge project if you’re looking at the same profit on a smaller, lower priced project. Here’s some other considerations when it comes to finding a flip.
3. Prepare to get multiple bids from a variety of contractors
Don’t wait until you have the house to start this step. Begin to source referrals as soon as you can. Ask people for referrals, who do they know, who have they hired. General contractors, plumbers, electricians and HVAC (heating and A/C) will all be trades needed on a standard flip. Even if you don’t have a project on your radar once you have one, things will move quickly. Contractors aren’t always available to meet on short notice for walk throughs and bids. If you have a limited number of days you may have to reach out to a few of them so having a strong list prepared will be helpful. If you want some more of my tips you can read here.
4. Establish your processes early
Get familiar with the order of how things will flow. Being prepared at each turn knowing the order that things to be completed in so you’re prepared when you find that right flip. Many times people look for houses first without having anything else in place. You want to be able to act quickly. Both from a competitive standpoint but also from the perspective that you want to show the seller you’re a serious buyer. Often times being the first offer in has gotten me the house despite interest from other parties. Make sure you have your approval letter ready to go. That will need to be submitted with your offer so you’ll definitely need that piece of the puzzle
5. Make a list and follow it
Use a checklist – There are a number of steps that if you follow, will make for a smoother process. From the initial walk through, determining your offer, creating a scope of work for bids, creating a calendar, planning can make all the difference. One of the very first places flips can go awry is when delays occur. That is why developing a calendar is key. Efficient projects are those where everyone is on the same page with timelines.
6. Identify your role in the project
Are you skilled in an area where you will be contributing time or work to the project? If so, include that as part of the scope for the project. If you will be acting as the project manager and overseeing the progress make sure to allot for that as well. Establish that early on so that you know what your role is and that you can plan accordingly.
7. Look at comparable sales…closely
Once you have a house you’re interested in make sure to look at comparable sales, otherwise known as a comp or CMA (comparative market analysis). With the current price of the property is there a large enough margin to renovate and resell the home? You’ll want to see similar houses that were sold at a higher price so you can confirm that the neighborhood will support an updated home sale. If you’re not able to verify that higher sale you’ll want to keep looking.
So we’ve assessed whether or not you’re ready to flip and looked at 7 tips to set up your flip for success which you can start on right now. Lot’s of information to think about but if there is one thing I am certain of it’s that action is the key to any successful flip whether it’s #1, #5, or #100.
Next week we’ll look at the final phase to successful flipping and you’re sure to catch an idea or two that have been the foundation of my business.
I’m Ready to Flip, What’s Next?
Ready to take that next step when it comes to flipping?
That’s why I’ve got additional resources to help you get the information you need to move forward on creating your flipping life.
Make sure you have the Fixer Upper Checklist so you know which areas are key to added value in a home.
There are several videos available on finding houses, renovations, and funding on the Threshold Homes YouTube Channel. Check out your favorite flipping topics and new videos weekly.
You can’t close a successful and profitable flip unless you start. What is your biggest challenge is with getting started house flipping? Let me know. It may be an area I’ve also had questions about myself. I’m here to help so drop me a DM.
Amber
Want to buy a property and renovate it?
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Looking to buy a house to renovate? Check out the fixer upper checklist to help you find the house with the most “flip” potential.
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