How to Get the Most Profit from Your House Flip
Flipping houses is an exciting business. There’s nothing more rewarding than making a big profit when the property sales. However, we all know it’s not as easy as they make it look on TV. It takes a lot of planning, hard work and dedication to complete a successful house flip and generate the best possible return on investment (ROI). Here are a few tips from PropertyLark to maximize your fix and flip profitability.
1. Find the Right Property
Finding the right property is critical to your success as a fix and flip real estate investor. There’s so much that goes into buying a good house that you can renovate and resale. You’ll want to consider the purchase price, as well as the condition of the house. How much will it cost you to renovate it? How long will it take to complete the project? Project all your timelines and expenses before making an offer. The other important projection is the ultimate selling price. Figure out how much the property will sell for once fully renovated and properly marketed. Make sure there is a healthy gap between your expenses and your projected resale value. If the margins are too tight, you will want to look at different properties or lower your purchase offer.
2. Set a Target ROI
One way to ensure a positive return is to establish a target return on investment (ROI). If your goal is to clear $50,000 when the property sells, then make sure your numbers add up to give you that kind of profit. Work backwards from your target ROI as you run property analytics, project expenses and estimate resale values. Don’t buy a property if it won’t get you the ROI you are looking for.
3. Be Conservative
Another great tip is to be ultra-conservative when it comes to projecting costs and profits. Plan for the worst and hope for the best. Set your budget assuming that the renovation will take longer and cost you more than initially expected. Also, set a realistic resale price range. Be willing to accept the lower end of that range if that’s what offers are made. Make sure the difference between the low end of your resale price range and the high end of your expense range is within your acceptable target ROI range.
4. Plan Carefully
Everything about your house flip should be planned out carefully. Here are the details to cover:
- Purchase Budget
- Target ROI
- Renovation Budget
- Renovation Plan & Timeline
- Resale Marketing Strategy
- Service Provider Budget/Network (Realtor, Attorney, Contractors, etc.)
5. Be Prepared for Surprises
No matter how well you plan and budget your house flip, there are almost always surprises along the way. You may encounter unexpected repair expenses, construction delays and other issues that may cost you time and money. The real estate investors know they have to be mentally, physically and financially prepared for everything that can and will happen during the fix and flip process.
These are just a few tips to help you get the most profit from your house flip. It’s important to know what you are doing and stick to your plan in order to achieve the best possible results.
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