10 Need to Know Tips for Flipping a House
10 Need to Know Tips for Flipping a House
Flipping a house can seem like a daunting task for a new real estate investor. Trust me, the longer you are in the business the easier it gets. In this post, I reach back through my 10+ years of investor experience to bring you 10 need to know tips when flipping a house.
Don’t let emotions dictate a deal
This is a quick way to kill a successful flip before it even starts. I see this very often with new real estate investors trying to get their first deal. They rush the research on their comps or get so eager to start flipping a house that they pay too much for the property and end up with an under improved house.
Don’t let emotions dictate your deal. If the numbers don’t make sense, then don’t do the deal. People buy and sell houses every day. There is a property that fits your criteria out there right now. You just have to find it!
Manage your time wisely
I’m sure we’ve all heard the saying “time is money.” It has never been proven truer than when flipping a house. The more time you have tied up in a flip, the more money you’re spending on it. You can take that to the bank!
Even if you don’t have contractors out there working on the house, you are still spending money. There are taxes to worry about, landscaping, cleaning costs and utilities. The longer your house is on the market, the more you are spending for it to just sit.
Make sure that you have a strict timeframe and that you stick to it.
Monitor your progress
Monitoring your progress goes along with managing your time. Create a process for flipping a house that works with your expected timeframe. Creating a process can really help you turn the art of flipping a house into a science!
If you have a process in place, then you probably have matching timeframes. A great example of this is breaking down your repairs for your flip into weeks.
Another example of monitoring your progress is checking on the progress of your flip regularly. This doesn’t mean stopping by once a week. Stop by every other day or at least twice a week. Be engaged with your team and remember to drive for results.
Set strict timeframes and processes and follow them. You’ll be managing your time and progress at the same time.
Flip with your buyers in mind
Painting every room in your flip a neon color might seem like a cool concept, but 9/10 people will ask you to re paint it for them. Flip with your buyers in mind. What is the best way to do this?
While searching for comps or while browsing for ideas after you have closed the deal, check out what other houses have included as updates. These will typically differ depending on what part of town you’re working in.
Flipping a house in a historic district will require different materials and styling than flipping a house in the outskirts of town that may be newer and in better condition. Use whatever tools you have at your disposal to figure out what your flip needs, then execute them better than all of the surrounding properties!
Supply plenty of WOW factors
If you’ve done your research and run your comps correctly, then you have an idea of what your flip needs to include. Now, what are you going to do to set it apart from all the rest? Why is a buyer going to pick your house over the next guy’s?
It all comes down to WOW factors. Kitchens and bathrooms sell houses. Ok, there are many different factors that sell houses, but a lot of times it comes down to kitchens and bathrooms. Make sure that your bathrooms and kitchen have some of the best materials and features in the entire house.
Make a great first impression
Curb appeal is a huge part of flipping a house. How are people going to want to come in and see the work that you’ve done inside the house if the outside doesn’t look inviting?
Make sure that you choose an attractive color scheme for the outside of your house. Replace the front door and repaint it to go with the scheme of the outside of the house. You might even consider putting in some new flower beds and pressure washing the driveway and sidewalks.
Remember, a for sale sign in the front yard will only do so much. Make it your goal to have people stop and look at your house before they even notice it’s for sale.
Get multiple contractor bids
This is another problem I see a lot of newer real estate investors having. They get ready to start flipping a house and end up working with the first contractor that gives them a bid. This is a mistake when you are starting out.
Shop around for contractor. They don’t all work at the same rates. You may find somebody who is willing to work for thousands less than the first guy that gives you a quote. Getting multiple bids is also a great way to build depth on your bench.
Was that a sports analogy? Yes it was! Just like with any pro sports team, a real estate investor has to have his backups ready to go. Getting multiple bids by contractors allows you to build a roster. You should always have at least 3-4 contractors in your phone at all times that you regularly contact.
Expect the unexpected
Things go wrong. Mistakes happen. It’s all part of flipping a house. You cannot plan for everything. The best that you can do is to make sure that you have the time and funds to deal with problems as they come up.
Whatever schedule you have for repairs, add one week. Whatever funds you have set aside for repairs, add a couple of thousand dollars. Always be on call incase problems arise. You may not be able to predict everything that could go wrong when flipping a house, but you can be prepared for it.
Stick to your exit strategy
Always know your exit strategy. This is one topic I’ve covered quite a bit in previous posts, but there is a reason for that! Sticking to your exit strategy can save you money in the long run.
One example of an exit strategy is buy, fix, sell. If your are a flipper then this is probably your strategy all of the time. If the goal is to sell your house, then sell your house. If it doesn’t sell right out of the gate don’t try to rent it out or wholesale it, sell it to an interested buyer.
If this means cutting the price then cut the price and get it sold. If you are trying to wholesale a property but can’t get it moved, cut your fee down and try to sell it again. Decide what your exit plan is and stick to it!
Price your house right
Comps are another important tool when flipping a house. Your comps dictate how much you can sell the house for, how much you need to buy it for and what all updates the house needs. Establishing your house’s After Repair Value (ARV) is one of the most important processes when flipping a house.
Remember to double and even triple check your comps to make sure your house is going to net the amount of profit you want. You also want to make sure your flip is priced right from the start so that it sells quickly.
If your home is overpriced it will take you longer to move. If it is underpriced then you’ll be killing your profit along with the property value in the neighborhood. Run great comps and focus on accurate pricing.
Again, all of these tips come from experience. These are things that most real estate investors have come across at one time or another. Hopefully you will be able to learn from my experiences, as well as the experiences of others, and avoid some of these easy to make mistakes when flipping your next house! Learn more at andrewcordle.com
