The Art and Science of Flipping Houses
There has been a lot of attention focused on the money to be made flipping houses but it may not be as easy as it seems. Like any other type of investment, knowing what you are getting into is important and can mean the difference between success and failure.
Follow a plan for success
Flipping residential real estate for profit is more than simply buying a house cheap, fixing it up a bit and then reselling it for a profit. While that is the basic process, it is important to understand exactly what each step entails and handling it in the most efficient way possible.
Finding the right property
Finding the right property is the beginning of a profitable flip. This involves some research into the area as well as what buyers are looking for. When you compare a particular property with others in the geographical vicinity as well as price range, you can determine the potential value from a flip. Determine the probable cost of repairs and improvements, adding an extra 15% to 20% to cover ‘surprises’ and estimate a future sale price that will cover your purchase price, the improvements and the fees you will be paying for until the property is sold – that will be your profit.
Look for a mid-range property that you can negotiate a great price for. For new ‘flippers’, it is best to purchase a property that simply requires cosmetic improvements that are relatively easy and inexpensive to address. Starting with a good purchase price, your sweat equity – doing the work yourself – will leave you with more money in your pocket when you sell at a higher price.
For more distressed properties, it may be necessary to hire professional contractors to repair wiring, plumbing and other structural issues. Creating relationships with carpenters, plumbers, electricians, landscapers and other home improvement specialists is an important step if you plan on flipping houses on a regular, professional basis.
The right improvements are the key to your success
Making the right improvements brings in a better return on investment. Flipping a house is not the time for indulging in your personal taste. The key to success is in providing a clean, functional and safe environment that will appeal to anyone. Basic changes in kitchens and bathrooms such as installing new appliances (stainless steel is a safe choice) and faucets, updating paint and cabinet surfaces and caulking tiles, windows and sinks provide the greatest monetary returns.
In addition to a clean interior, curb appeal is another important feature to consider. Repairing or replacing broken or worn out fixtures, screens, gutters and pavers creates a significant upgrade to the appearance of any property. A well-cut lawn and some attractive flowers and shrubs add a homey look that is inviting. Having a house ready for sale in the spring is the best way to capitalize on the ‘selling season’. Even if it is not quite ready, take advantage of the increase in potential buyers by advertising the property as ‘Coming Soon – For Sale’ so people can add it to their list of properties to consider.
Promote, promote, promote
Get ready to sell by advertising in as many ways as possible. Social media is a fantastic option for reaching a wide audience and sites like Craigslist or Trulia provide easy access. MLS listing is also important. Professional photos may be a good investment to show your property to its best advantage and setting up virtual tours can also capture the attention of truly interested potential buyers.
For in-home showings, it is important to stage the property so potential buyers can get a true feeling about living in the home. Small touches that invite the buyer go a long way in making a positive impression. Fresh flowers in the living area, air fresheners that are not overpowering, neutral hand towels in bathrooms and simple curtains soften the look of a nearly empty house. It is also possible to rent furniture for staging so that is something you need to consider, keeping in mind your overall expenses and budget.
Flipping real estate, especially in an improving market, can lead to tremendous income for anyone with the time, money, skills and patience for a bit of research and some hard work.
For complete, friendly service to help make your real estate transactions smooth and profitable, contact Derek Worchel at Keller Williams Western Realty, serving Blaine, Lynden, Bellingham and Ferndale, where professional experience means professional results.