7 Tips for Buying Houses to Flip
If you are looking to flip houses, you have to make sure to do things right. Many first-time house flippers make common mistakes that end up costing them a lot of money. Some fix and flip investments even lose money when the project is managed poorly. You have to make smart decisions throughout the process to ensure a great return on investment (ROI).
Here are 7 tips we recommend when buying houses to flip:
1. Develop Your Business Plan
Remember that house flipping is a business venture. It is a major investment of your time and money. Don’t go into it without a solid investment plan. Know your overall budget, your overall profit goals and have everything lined up long before you start searching for houses to buy, fix and flip. Are you looking for a complete remodel or a property that just needs a little work? Are you doing the work yourself or hiring contractors? How much can you afford to spend on the purchase and repairs and how much do you need to make in the end to consider it a success?
2. Make Sure Your Financing is in Order
How are you planning to pay for the property, as well as any repairs, renovations or upgrades that are needed before it goes back up for sale? Understand your overall budget and make sure you have your financing in order. Are you paying cash for everything or are you financing it through a loan or private investors? Don’t even think about buying a house to flip if you don’t know how you are going to pay for everything!
3. Conduct Thorough Market Research
Where you buy is just as important as the type of property you are buying. Location is everything in real estate. Research the market and find target areas where you want to buy. It may be an up-and-coming neighborhood. Look for opportunities where a fixed-up house will sell quickly and for top dollar. At the same time, you also have to find a property you can afford. Finding the ideal house is one of the trickiest parts of house flipping.
4. Be Patient with Your Property Search
Speaking of finding the ideal house, this is where some impatient investors make poor decisions. They buy the first thing they see, even if it’s not a very good deal. Take your time, do your research and make sure you find a property that fits your real estate investment criteria. A strategic home search is key to becoming a successful fix and flip investor.
5. Conduct Detailed Property Analytics
Property analytics are another crucial component of the house flipping process. Your business plan and budget may give you an overall view of what you want to spend and what your target ROI is. However, you then have to conduct very detailed property analytics for any house you are thinking about buying. No two properties are ever the same. Run the numbers. Know what it will cost you to buy and estimate the time and money it will take to make the necessary renovations. Project the final resale value. It’s also a smart idea to be very conservative with your estimates. Expect it to take longer and cost more than you want, and then anticipate it selling at the lower end of your resale estimate range. This is how you protect yourself from a losing investment.
6. Develop a Specific Renovation Plan
Now that you have identified the best property to fix and flip, you have to develop a renovation plan specifically for this house. Go through every detail and expense. Plan out your construction timeline and budget. Talk with contractors and construction specialists. Get all your ducks in a row before you start hammering down walls.
7. Join the PropertyLark Investment Network
For help with all these stages of fix and flip investment, it helps to be a part of a successful network of property buyers. Join the PropertyLark network and access valuable property analytics resources, home search tools and other information that will help you become a better real estate investor.
To see if you qualify for the PropertyLark network, fill out the contact form to the right and the brief questionnaire that follows.