Rules for house flipping you should definitely know about
Whether you’re a house buyer or a real estate agent, if you’re somehow dabbling in any form of house flipping, then you’ve got to read these set of rules to ensure you won’t make any mistake and maximize the profitability of your fixer-upper.
1. Never judge a house by its cover
Borrowing from a cliche quote about judging humans, this can also be applied to houses. You can’t really see everything just by viewing the facade of a property, let alone the possibly devious front lawn. As someone who’s going to invest a ton of money to flip a property, you should be able to inspect every part of the home. If the original owner prevents you from doing so, take your business elsewhere. That’s the first sign that he or she is hiding something.
On the flip side, you might miss out on a good opportunity just because you thought the front porch was a little wonky. Take a closer look to see if anything is salvageable. Even the worst issues can be flipped, yes that includes foundation damage if you know the right people to do the job. The best part? If you’re from Missouri, you can simply search for Kansas City foundation repair and someone can definitely help you out.
2. Talk to a professional house inspector
Professional home inspectors are paid to keep their trained eyes wide open for possible issues when it comes to a home. Naturally, you won’t be able to see everything after just one visit. So to be doubly sure, bring an inspector to your potential property.
If you’re a real estate agent, you might also want to hire a home inspector to do this so that your clients can trust you all the more. Although, don’t take it too harshly if they bring their own inspector. If you have nothing to hide, then, of course, you’d welcome the visit with arms wide open.
3. Estimate the entire cost before buying
A responsible house flipper knows the asking price of the property is the least of his or her concerns when it comes to financing. We all know that the reason you got that fixer-upper is that it’s a relatively cheaper home than those available in the market today. However, the bulk of the cost would be in repairs and other upgrades you’re going to do to the property.
As a general rule, veteran house flippers use the trusted 70% rule which means you should never be paying more than 70% of the after-repair value of the entire property minus the cost of repairs themselves. Meaning, you should always take into consideration how much money you had to chip in to make the house flip look brand new.
4. Take advantage of technology
Once you’re ready to sell your property, the best way to do so is through a real estate agent. However if you can’t really pay for one (or maybe you don’t want to hire one), then the next best thing is to take advantage of technology. Set up a website, make an email list, and look for some potential buyers online.
On the other hand, if you’re a real estate agent, that doesn’t mean you don’t need to rely on digital tools. As someone who needs to sell more houses for a living, you should definitely be investing in business tools that would improve your success rate and productivity, too.
5. Don’t go beyond your time and budget limit
If it takes too much and too long to fix a house, it’s not worth it. There’s only one exception to this rule. And that is if you already have a buyer locked in on purchasing your house… take note, an actual buyer, and not a potential one. This means you already have a deal set in stone and he or she is just waiting to complete the repairs and would be ready to move in.
Otherwise, a project that is taking too long to do might just get you too anxious to start. Patience is definitely a virtue but if it’s going beyond what you originally planned, it might be time to think about other options.
6. Never fall in love with a flip house
This is the unspoken rule of house flipping. You should not fall in love with anything you’re intending to sell because otherwise, how are you going to take profit? Although I have to admit, if you’ve done your fair share of sacrifices and made sure that your fixer-upper is as beautiful as it can be, you have to learn how to let go.
House flipping is a good idea to earn a good buck. However, it takes a ton of patience and a good eye for fixer-uppers before that can be achieved. But I’m confident you can do it if you were able to read through this article until the end.
Story by Bilal Sajjad. Sajjad is a full-time writer who loves to write about home improvement, buying and selling new homes and property.