Before You Pick a House to Flip, Consider These 6 Factors
Congratulations! You decided to roll up your sleeves and start flipping houses. Thanks to the boom of reality television shows involving real estate, it is easy to become motivated to undertake a real estate project involving flipping. People on these shows make flipping homes seem easy. Perhaps even more importantly, these shows make flipping homes seem adventurous and fun. However, before you begin, make sure you consider these six factors below.
Location, Location, Location.
Make sure the home you intend to flip is in a prime location. Many times, the best homes to flip are beat up homes in a nice neighborhood. You want to stay away from homes in neighborhoods that have difficulty attracting people. Those granite counters and beautiful bathroom fixtures you intend to install in the home will mean nothing if your home is in a poor, unattractive, or unsafe area.
There are many reasons why all of those home improvement shows make flipping homes look easy. Perhaps one of the most important reasons is that those investors and contractors have all of the right tools. The jobs they tackle can often be done quickly and easily because they have made tools their first investment. Unfortunately, many of those tools are expensive. These tools include table saws, drills, jackhammers, stump grinders, and more. Also, these people also have huge collections of relatively inexpensive tools that add up to a large amount of money. If you don’t own many of these tools, be sure to factor the cost of them into your renovation budget.
Even the best home renovators can’t do it all. If you plan on flipping a house, make sure you know exactly what renovation projects you are comfortable doing. Budget accordingly for professionals to tackle electrical, plumbing, or large demolition projects. The home you intend to flip can quickly become a money pit if you fail to factor in the need to hire the expertise you lack.
So many of those home improvement shows fail to show all of the paperwork involved in a home renovation project. Many cities and neighborhoods require building permits to be obtained for exterior and interior renovations. If you fail to obtain a permit, you could be slapped with a huge fine. Compounding these matters, each city and neighborhood is different. You will never know what permits you need until you actually go down to the city hall and ask. Also, if you are hiring a contractor for a project, don’t simply rely on him or her to obtain the necessary permits. As the property owner, it is your responsibility to obtain them. You will be the one responsible for any fine. This is true even if your contractor said everything is in order. Always triple check your permits before working. Finally, make sure you budget money to pay the costs of the permits you need to obtain.
Unless you are independently wealthy, you will probably need to obtain a loan for your real estate project. Before you go looking for that loan, add up everything you will need. This includes all of the expenses noted above. Additionally, unexpected things happen all of the time during a home renovation. Make sure you are taking out a little more than your entire budget. This will provide a financial cushion for your project. If you end up not needing the money, you can always use the surplus to start paying off your loan early. Naturally, you should shop around for the best interest rate on your loan. One great location to do this can be found here.
Don’t put off locating a great realtor until after your project is finished. A realtor can help make suggestions as to what renovations will bring the maximum return to your home. Also, you will want a realtor who is savvy with photography and Internet marketing to help sell your home. Remember, most home buyers will first learn about your freshly renovated home through images on the Internet. Make sure those images count.
Flipping a home can be both lucrative and fun. Follow the above suggestions, and your next real estate project will be a success!