When you want to flip a home, there is no easy way to do it. Every flip is bound to have a “monkey-wrench” thrown into it somehow. There’s always something that comes up that you didn’t see. These “monkey wrenches” often include added expenses or additional repairs that you didn’t see coming when you had the initial inspection done on the property.
However, despite the different things that might come up during a flip, there are some clear processes and steps that you want to follow to ensure that the flip goes smoothly and on schedule as possible. Ensuring that you take the proper steps to flip each property ensures that you can flip each property on schedule and turn the profit that you are planning to turn with each property.
The following are 12 tips that will help you ensure that your flips go as smoothly as you can make them go:
- Search the Market: Comparing many different markets and real estate agents allows you to determine which homes you want to consider flipping. You should have a maximum budget in mind for each home, the condition of the home, and what you’re willing to pay. These guidelines will help you decide which homes you can afford to invest in and which ones you will pass on.
- Set A Budget & Timeline: Decide how much you are willing to spend on the property and then on the ensuing renovation. Consider a timeline for this property. Many flips are completed in 8 to 10 weeks, but some may take longer or not as long depending on the state of the home when you purchased it and the work that needs to be done. While budgets and timelines may never be 100% accurate, it gives you a basic guideline to follow when determining how your project will go.
- Choose a Neighborhood with Amenities: People will be more likely to pay more for a home that is located closer to the daily amenities they use. Look for neighborhoods with parks/green spaces, local libraries, nearby medical facilities, recreational facilities, a high walkability score (many people do not drive or own a car), nearby shopping, a variety of different dining options, and nearby access to public transportation. Consider neighborhoods that are also free of litter/debris, are well light at night, and that have relatively low crime rates.
- Check School Districts: Many families will only consider moving into areas with “average” or “above average” school ratings. If the school district is poor, this may detract from many families with children wanting to move into the area. Checking the ratings on the school district your potential property is in is key to ensuring the home’s location appeals to families.
- Compare Other, Similar Properties: Understand what other, similar homes are going for in your area. If the property you are looking at is comparable in features and location and not in price, you may not be getting the best deal around. Moreover, consider how many days the property has been on the market and the lot size as well as other variables. Homes that have been on the market for months might give a clue of a reason that no one else wants this property either. Shopping smart can save you money and help increase your profit.
- Narrow Down Your Search: Once you find a list of homes that meet your criteria for budget/affordability, location, amenities, etc. narrow the search down to the top few homes that you want to bid on and create a “short list” of shorts.
- Have The Properties You Wish to Bid On Inspected: It’s worth the inspections fees which usually run $300 to $500 per property to ensure there are no underlying issues. Homes that have structural or foundation issues are generally ones you wish to pass on. Those few hundred dollars can save you weeks of time and thousands of dollars if you don’t have any “surprises” during a renovation.
- Place Your Bid: Place your best and highest competitive bid for each property you wish to flip. On bid on a few at a time to ensure that you are not stretched too thin if you win the bids you put in. Remember that coming in with a competitive offer is key as the real estate market and economy improve. Many other people may want the same property you do. If they give a better offer you may lose on sales when you could have paid more. Best and final offers are key to ensuring you are competitive in going after the property you wish to purchase.
- Forecast Your Renovation Budget & Draw Up Plans: Once you have the property in your possession, determine how much you can afford to spend on renovation. If you paid more or less for the property than you originally planned, that could influence your renovation budget. Set a timeline for the renovation and how long it should take. Then get to work with a plan and outline in mind.
- Keep Things on Track: While no one can avoid the occasional issue or problem that sets the renovation back a few days, try to keep the project on track or close to it as you can. A few late nights or long days can pay huge dividends to keep you on track and not stopping the home from going on the market and making a profit.
- Consider A Final Inspection: Most buyers will want a final inspection before they close on a home. The final $300 to $500 investment can help make selling your home much easier (and faster) when buyers know a reliable inspector approved the home for sale. Knowing they are moving into a safe home will also make many buyers willing to pay a little more for the finished product.
- List the Property For a Profit: Finally, your renovation is complete. Listing the property for a profit lets the bids flow in so you can take the best offer!
These are 12 great steps to help you plan your renovation. While no renovation may go perfectly, doing your homework before you purchase a property and understanding how you will go about the renovation can save you many other headaches or unforeseen circumstances along the way.