Creating a Fix and Flip Success: 9 Tips from the Experts
To make your fix and flip a success, you’ll want to follow these 9 tips from experts to create maximum profit with minimal obstacles.
You’ve seen the shows on TV and know just how rewarding it can be to flip a house successfully. As fun as the process looks and can be in real life, there are also lots of challenges and obstacles to expect and plan for along the way. A flip success can provide you with a significant profit, but how can you ensure you’ll be successful?
Because there are so many small and big details to consider when you’re flipping a house, sometimes, it takes time and experience to become successful. Although you may be new to flipping houses, you can start your new journey with confidence. All you need is a few fix and flip tips to ensure you make all the right decisions and avoid any hardship.
How can you get started?
In the guide below, you’ll find several tips and tricks for flipping a house. Continue reading below to find out more!
1. Know the Market
Knowing the market will help you greatly when you’re ready to both buy and sell. There are ways to conduct your own research about the current market and trends, but working with a real estate agent can be beneficial if you’re just starting out.
As you dive deeper into your flipping career, you’ll begin to understand the buying, selling, and flipping market more and more. Because you’re new to flipping houses, it might be a good idea to have an agent by your side to give you advice when needed and help you negotiate and find the best deals.
You can also use Multiple Listing Services to find properties for sale listed by brokers. Before buying a property, it’s also important to have knowledge about the neighborhood it’s in as well. Research the neighborhood to understand the current market trends in that specific location.
2. Create a Budget and Timeline
Buying a house at the right price is crucial if you want to make a profit from your flip. It’s important to factor in all costs associated with buying, flipping, and selling a house. For example, don’t count out the closing costs, agent’s commissions, contingency costs, money-lending costs, and more.
These will all need to be considered when creating your budget. If you want your flip to be successful, then do make sure to create a budget and timeline for yourself ahead of time. How can you set the right budget for yourself?
You’ll need to do the math to figure out how much the repairs will cost, plus the cost of all other fees. Then, you’ll want to figure out how much the house will be valued at after the repairs are done. This is called the ARV (after-repair value).
Following the 70% rule is a great starting place. How does this rule work?
Take the ARV and multiply it by 70%. Then, take that number and minus the estimated cost of repairs. The final number you get is the most you want to spend on a house before fixing it.
3. Don’t Overdo It
Fuxing and flipping a house can be an exciting and fun time. You have a vision in your mind of how you want the final product to look. With so many different options of cabinetry, paint, hardware, and appliances, where do you begin?
You should start by knowing where you want to spend money and where you don’t want to spend the money. What repairs are going to give you the biggest ROI (return on investment)? Don’t overdo your repairs, and understand what repairs are worth making.
For example, if the house is located in a neighborhood where the comps (completion houses) don’t have the most high-end products, then you don’t need to worry about finding the most expensive countertops or appliances to keep up with them. Instead, focus on finding good quality products that are affordable.
Don’t become too attached to the property or begin repairing it with your emotions in mind. Do what’s necessary, make the house look nice, but don’t overspend where you won’t see the money come back to you.
4. Find a House in Need of Cosmetics
With this information in mind, the best houses to flip are the ones that only need cosmetic repairs. If you can find a house with little structural, electrical, plumbing, and other big fixes, then you’re in luck. Cosmetic repairs are the least expensive and the most fun to complete.
A house in need of a new roof or new plumbing can get costly fast. A home with good bones but ugly skin can be improved quickly and affordably. Look for the following cosmetic repairs: a fresh coat of paint, new flooring or carpeting, updating appliances, and refinishing cabinets.
These are all repairs that you can do without much worry about spending money or finding bigger issues down the road.
5. Inspect the Property First
Having the property inspected first can save you in the long run. Remember, you want to focus on properties with more cosmetic repairs than anything else. An inspection will be able to tell you what type of repairs a home will need.
Even if a house looks great as far as big issues are concerned, it’s always a good idea to have the property inspected by a professional. Paying for a professional inspection might not seem like the most ideal option, but you’ll be glad you did. If you’re not a professional, it could be easy to miss something major, such as a faulty electrical system.
The cost of hiring a professional inspector is far less than having to hire someone to correct something major like bad wiring when you discover it weeks into the project. If an inspection finds something major needing repairs, then don’t hesitate to walk away from it. You’re not tied down to anything until you sign the papers.
6. Plan for the Worst
No one wants to expect the worst out of a situation, but it’s always a good idea to have a backup plan in case something were to go wrong. How can you plan for the worst? What is the worst situation?
The worst-case scenario might be that the real estate market takes a turn and suddenly drops. You’ve repaired this house, and it’s now beautiful but you have no buyers. Maybe the economy has changed, and you can no longer sell the house for the price you expected.
If either of these situations were to occur, then what’s your backup plan?
If you can’t sell the property, then consider holding onto it and renting it until you can. Renting it out could be a better option than taking an entire loss. Can you make a profit by renting out the house?
know the answer to this question before you decide to buy or not. If renting the house won’t benefit you, then you might want to consider another house or figure out a different backup plan.
7. Know Your Buyer
Know the neighborhood the house is in and know the buyer. Who are you selling to? Is the neighborhood a family neighborhood, or are there more single businessmen and women there than anyone else?
Knowing about the neighborhood and knowing who the buyer is will help you determine how you want to style and design the house, which will ultimately help you sell the house. What type of features is your buyer looking for in a home, and what’s their price point?
You want to price your flipped house within the buyer’s budget. Keep this in mind when creating your own budget as well.
8. Pay Attention to Curb Appeal
Don’t forget to fix up the outside of the house. There’s much to do on the inside, but the outside of the house is what gives it its curb appeal. The curb appeal is the first thing buyers notice when they approach the house.
Does the house’s exterior have a fresh coat of paint? Is the lawn well maintained? Does the garden have fresh mulch and healthy plants?
Where can you make small improvements to really impress buyers? Make these improvements and grab the attention of buyers as they drive past the house.
9. Start Saving Now
Most house flippers have cash on hand to purchase the house with. You’re going to want to have cash on you to put a down payment on the house, if not to buy the house entirely. Because of this, it’s best to start saving now.
If needed, you can always consider taking out a loan. Home loans for flipping houses are a great way to get the money you need right away, so you can buy the perfect house to flip before someone else grabs it.
Are You Capable of a Flip Success?
Not sure if you’re capable of a flip success? Of course, you are! Follow the tips listed in the guide above to give you the boost you need when starting your own fixing and flipping business.
With this helpful information in mind, you’ll know how to find the best houses for flipping and making a profit.
Are you ready to get started but need a fix and flip loan to get started? Apply here today and a loan originator will get back to you in a few hours!