Fixing up homes and selling them for a profit is a rewarding and humbling experience, but no one does it just for fun. This line of work can earn you a lot of money, and you get to be your own boss. However, it can also lose you money. How do you know the homes you are investing in will make profit?
In this post, we are going to share our best tips for flipping houses for profit. Let’s begin!
Study the Local Market
Each area is different – down to the actual streets. Research the local market through and through. A few things to pay attention to include how established a neighborhood is, nearby schools, homeowner demographics, and home prices. Review recent sales and comps so that you have a realistic expectation of what your home will sell for and how long it will sit.
Stick to the Numbers
In the real estate world, you can’t make decisions based on emotion. All decisions must be based on the numbers and nothing more. Educate yourself on After Repair Value or ARV. This is the price that your home will sell for once it’s properly rehabbed. According to HouseFlipMentor.com, you want to buy and rehab a house for 70% or less than the selling price. If you go over this number, you’re not doing any favors for yourself or your investors.
Know Your Buyers
It’s tempting to rehab a home to your liking, but you must keep your target buyer in mind. Are you fixing up the home for a family? An older couple? Young families prefer open layouts with large kitchens and family rooms. If you’re buying a home in a younger neighborhood, think about these features. Even something simple like a playhouse in the backyard or a bonus room in the attic can sell a home.
Disclose All Repairs
People who purchase a flipped home expect it to be move-in ready. Give buyers the peace of mind that core parts of the home have been updated such as windows, roofing, siding or HVAC equipment. If there are warranties with these new items, pass the information along to potential buyers. People like walking into a home and knowing that things were done right!
Fixing and flipping a home takes a lot of work, but that doesn’t mean you should overprice your property. Prospective buyers only care about what they see; they’re not going to pay more because the property looked terrible on day one. If you price the home too high, you’ll end up sitting on it and losing money. Be competitive, stick to your ARV and the property will sell quickly.
House flipping can be a rewarding, lucrative career opportunity that grants you the financial freedom you’re looking for. But, you must let good choices, accurate numbers, and honesty guide the way. By following the tips above, you can flip a house for a profit and continue on this exciting path!