6 Fix and Flip Do's and Don'ts
Flipping houses is a great way to make a profit in a short amount of time while gaining further education in construction, negotiating and financing. However, house flipping isn’t as easy as it looks. Like other investments, there’s always a chance that you could fall, especially in the beginning when you are new to house flipping and hard money.
Thankfully, it helps to know the essential do’s and don’ts of flipping houses. Below we share three essential do’s and three essential don’ts to pay attention to.
1. Do make sure the numbers make sense.
A good fix and flip project starts by buying the right property. Calculate the ARV (after repair value) so that you know how much of a profit you can make when you can sell the property. Also in your budget should be the rehab costs, marketing costs and carrying costs, including your fix and flip loan and interest rates.
2. Do check out what features are most desirable.
Before making improvements to the property, check out what features are most desirable in the neighborhood. You don’t want to overdo it on upgrades, otherwise you could end up losing money. For example, if comparables in the neighborhood have laminate countertops, you don’t need to install granite.
3. Do pick the right neighborhood.
Location is very important in real estate. Even if the numbers make sense, you want the property to be in a desirable neighborhood. Factors to consider are safety, commute times, school ratings and nearby amenities.
4. Don’t rush into hiring a professional contractor.
Take the time to find a general contractor who is licensed and insured. Flipping houses is a team effort, and you don’t want to tackle these projects on your own. General contractors can handle extensive changes like adding square footage, knocking down walls, fixing foundational issues and more.
5. Don’t price the property based on what you feel is right.
You know what went into the home, including all the headaches, but this shouldn’t influence your price. Instead, consider what comparables are selling for, the time of year it is and what type of market you’re in (sellers vs buyers).
6. Don’t forget to stage the home.
Even though the property will be newly rehabbed, you should still take the time to stage it. Home staging is effective because it emphasizes a property’s strengths, minimizes its shortfalls and helps prospective buyers envision themselves living there. Staging the home can also help it sell faster, allowing you to start a new project!
House flipping can be a rewarding experience and lucrative career, but there are certain do’s and don’ts to follow. As you build your team and get more comfortable flipping houses, following these tips will come naturally.
First Funding Loans helps investors like you who are looking to buy, fix and sell properties. Contact us today to learn more about our competitive hard money real estate loans.