Putting it very simply – house flipping is serious business. Don’t let the cheap commercials on aggregate websites fool you; although there is tremendous potential in this particular stratum of real estate, it is very competitive and things can go wrong quickly if you lack guidance. The following handful of tips is intended to get you off to the right start.
- Let a Professional Inspect the Property
Now is definitely not the time to be stingy: prioritize getting a professional inspection. If you do not identify construction issues early, they can grow to be become financially devastating in the future. Additionally, your buildings have to pass various structural codes; this is one expense that cannot be subverted in any way – the eyes of an expert are absolutely essential.
- Understand the Market; Know the Neighborhood
You’ve certainly heard this before: location, location, location! This old adage characterizes house flipping to a tee – understanding the neighborhood is so important when choosing a fixer-upper that you might even want to spend a couple of days in the vicinity after you’ve looked up neighborhood demographics online.
- Be Conservative in Renovations
This is essential if you want to consistently make a profit in your house flipping endeavors. Although it may be tempting to make choice upgrades, you always have to gauge these against what you stand to make as a result of them. Trendy stuff can go out of style real quick, which is another reason why it pays to know the neighborhood and the market very well before you make your bid.
- Plan for the Worst
The chief worry here is the event of an economic downturn in the local real estate market. Do you have a back-up plan if you cannot sell the house you’ve worked to flip all this time? One option is to have resources in place to rent it out until the market improves and you can sell. Financial instruments exist to help facilitate this on the rebound, such as owner financing.
- Be Mindful of Volatility: Keep Your Job
The final bit of advice comes from several very successful real estate investors specializing in house flipping: keep your regular job. The market is nothing if not volatile, and having a day job is part of the back-up plan we wrote about up above.