7 Property Flipping Secrets to Success
February 26, 2019
Sarah Kirsch Richardson
Many first-time property flippers have big dreams based in well-produced television shows that highlight the glitz and glamor of this growing DIY industry. It seems simple enough. Buy low, renovate and repair, sell high. But too often, newbies “get into the biz’ without sufficient knowledge of what to expect and how to be successful enough to garner a profit. Here are seven industry “secrets” to support a positive return on your investment.
- Speedy Planning
Too many newbies get caught up in finding “the perfect” house and forget to have a solid plan to execute after the sale. Be ready before signing the paperwork. Know how much it will cost, how long it will take to complete each project and who you will pay for labor. Plan out the expenses, set due dates and stick to them, but don’t cut corners. The longer the property sits with the investor, the more money it will cost him or her because of insurance, property taxes, mortgage, and utilities.
- Financial Responsibility
Real estate is an expensive field of investment, so it’s important to have a good grasp on what’s affordable and attainable as a potential investor. Those new to the field often overlook all types of expenses from property acquisition, interest, renovation costs and labor, to utilities, and the inevitability of an unexpected costly setback. And at the end of it all, there needs to be a profit. Consult an industry professional to help determine a solid budget, and stick to it.
- Patience for the Right Property
There are very few things in life a person can do on a quick whim, and purchasing a property to flip for profit is not one of them. Take time to conduct research on the desired market for the flip by looking at comps with a real estate agent. Have others been successful at fix-n-flips in the area? Why or why not? Drive around the neighborhood to ensure your vision for the property fits in with its surroundings. The house may be priced right, and the repairs needed could be minimal, but your newly renovated property won’t be worth any more than it sold for if it’s surrounded by neighbors who don’t put forth the effort to maintain their own properties. Remember that property flipping is not a ‘get rich quick’ scheme, it takes time to find the right investment.
- Hire a Professional Home Inspector
Whether you plan to make simple cosmetic changes or gut and renovate the entire property, a Home Inspector is a valuable investment. These professionals are trained to find every liability on the property. They find small fixes like hot and cold faucets that turn the wrong way, all the way to foundational cracks that could put your expense budget over the edge. Hire a home inspector to know where you truly stand with a potential investment.
- Know Your DIY Limits
Hiring a professional contractor for all flipping projects will surely eat away at all the potential profit. But a major mistake on a what you thought was a DIY project could be just as costly. Be honest with your skillset and know your limits. Make a list of things you know you can do and what you’ll need to pay others to do. If there’s an area for growth you’d like to pursue, many local home improvement stores offer free DIY classes to help build your fix-n-flip repertoire.
- You are not the Market
Successful fix-n-flippers complete repairs and renovations that appeal to the masses. You may love everything about the art deco era, but not everyone does. It’s important to know current industry styles and trends when putting the design plan together for the property. Forget your own personal preferences. You’ll want to create a clean, finished, yet blank canvas. Give every potential buyer the opportunity to see a house they can make their own, and you’ll soon have a bidding war on your hands.
The final secret of successful property flippers is short list of things you shouldn’t do:
- Don’t neglect easy fixes. Buyers will notice and wonder where else you may have cut corners.
- Don’t neglect the landscaping of the property. Curb appeal can be your best friend.
- Don’t demolish cabinets that can be resurfaced. A fresh coat of paint and some trim work are budget friendly and can go a long way.