How to Flip a House Without Making It Flop

Most Americans have a few guilty pleasures. For some, this is jamming out to country radio or indulging in too much chocolate. For the average suburbanite, this guilty pleasure may be watching way too much HGTV. Let’s face it: we can all enjoy watching and witnessing as a couple or a family takes on home improvement tasks. We jump with joy when a real estate agent helps someone find their perfect tiny home. And who doesn’t love going on the journey with Chip and Joetta Gains as they work to transform a fixer-upper into a stunning home? Flipping homes is also referred to as wholesale real estate investing, because if you do it right, it can actually be quite lucrative. You find a house in a great location that needs a facelift. After investing money and time into the project, you end up with a fantastic piece of real estate that you can resell for a profit. While this scheme can prove incredibly risky, it’s a thrilling ride. If you are interested in flipping a house, there are definitely traps you may fall into. Follow these helpful tips to guarantee your house flip won’t be a house flop. 

Find the Property 

It is no secret that real estate is an expensive business. You will have to invest quite a lot of capital into your project initially in hopes that you will at least break even. Try to find a way to finance the property with little interest. Time is also key when flipping a house. You don’t want to have a crazy payment plan where you will end up owing an exorbitant amount over the cost of the home. You want to hit the market just right, so you can buy the property for a low price, and sell it at a high one. This may take patience. Don’t be a novice and jump at the first house that becomes available. Wait until you can score a great deal, because a low cost of acquisition means a higher profit for you. 

When looking for a house to flip, your focus should be on location. There are already plenty of beautiful houses, but they may be in the middle of nowhere. Your real estate agenct will be able to market your flip much more successfully if the neighborhood is a good one. Plus, a good location and some additional amenities will bring the market value of the home up immensely. 

Assembling Your Team

Aside from choosing a poor property, a huge place where first time home renovators go wrong is when they assume they can do it themselves. One of your top priorities in the business is assembling a great team. This includes real estate agents, attorneys, accountants, renovators/contractors, and inspectors. With an undertaking as big as real estate investing, even professionals need all the help they can get. The project involves knowledge of many different areas. You have to understand the legality and finances behind purchasing a house as well as what home improvement skills you will need. 

Budget, Budget, Budget!

Now, all that additional help comes at a cost. When planning your home renovation, you have to budget for absolutely everything. Underestimating the cost of labor or supplies or taxes can tank your project and leave you in the red. Great risk can lead to great reward, but before you put all that money down, seriously consider how much you would be willing to part with. Flipping a home is always a gamble, whether it”s your first time or your one-hundredth time. But planning your budget carefully will help you succeed. 

One tip would be to separate your budget into sections. These almost directly correlate to your timeline for the project. Set aside money for buying, renovations, selling costs, and extra “safety” money. That cushion allows you to be prepared for anything. Before starting your project, there are inspections you will have to do to make sure your house is sound. Sometimes these bring about unpleasant discoveries like mold in the house or a sinking foundation. Those can be costly repairs you may not have been expecting, but having that extra cash to cover it will allow you to keep moving forward. Having a cushion also allows for you to splurge on a few purchases. Maybe instead of re-roofing the house yourself, you can afford professional roofing, or you can afford more extensive landscaping than you originally planned. Staying on budget is important, but if using some of your extra safety money can bring up the market value of the home, then go for it. 

You may not realize this, but as important as it is to budget your money, it is equally as important to budget your time. If you take too long on one project, you could be hit with all sorts of extra holding costs. Having your home on the market for too long means you are continuously having to pay a mortgage and insurance and other costs. Get in, renovate, get out. Sticking to a strict timeline will help your budget stay on track and also allow you to move on to another project quicker. 

How To Make Your Property Desirable 

Once your renovations are in full swing, you should start thinking about extra amenities which will make your home more desirable on the market. Sometimes this is the little things. While you want to make your home as fabulous as it can be, you can’t create something that is way above the market of your neighborhood. However, if every other house on your street has a huge deck with a swimming pool in the backyard, you may want to explore swimming pool construction. It’s all about balance and fitting in with the general value of the homes around you. 

Making your property unique and desirable is in the details. Think about adding a big bathtub for the master bathroom or state of the art kitchenware. These are the little pieces that will take your home from a value of $100,000 to $120,000 or beyond. While you do want to watch your budget, some of these smaller improvements can be managed at a more inexpensive rate. The key is to make your property seem expensive and fine, even if you didn’t pay top dollar. You are trying to build a livable and beautiful home for a new family. If you live by the golden rule and build a place where you would enjoy living, chances are someone else will want to live there too!