Here Are The Top 6 Tips for Flipping:
Have A Solid Budget. Not only do you have to take into account the purchase price and the renovation, but also take into account carrying costs (interest, property taxes, insurance, etc.) and make sure that you have a contingency fund in place should the project go over on budget and/or time. 10% of the rehab budget is a good rule of thumb.
Understand The Neighborhood And Market. Is the area an up and coming neighborhood that appeals primarily to the career minded millennial generation? Or perhaps the area caters to younger families and is known for fantastic schools. Study recent sale data and average days on market (DOM) to get a handle on realistic pricing and marketing strategies.
Don’t Over-Renovate. Some flippers are guilty of over-renovating. The goal of a flip is to deliver a sound property within a specified period of time and on a budget that reflects the neighborhood. Use the money in the places that it will return the most. Don’t go overboard with marble tile if it will price the home out of the neighborhood. Instead, look to add what buyers demand. If the space feels closed in, then consider removing walls to create an open-concept layout.
Price Accordingly. While it may be tempting to over-price based upon the time and expense that went into the renovation, be fair in your pricing strategy. Tour comparables in the area and compare features and benefits of each. Obviously, you don’t want the flip to be priced too low, but overpricing may make it sit on the market and means that you may miss out on lost opportunities to snatch up good deals while your money is tied up in the previous flip.
Choose The Best Financing. Although there are some loan programs on the market that offer little to no down, beware of the limitations that may come with them. Note that paying interest on a loan does affect your bottom line when the deal is done.
Have An ‘A Team’ On Your Side. Everyone from a lender, realtor, contractor, accountant and the list goes on. All of these professionals can lend you their expertise to be successful at flipping.