Flipping houses has become increasingly popular. The idea of transforming a run-down and dated property into something new and shiny is appealing. There is certainly profit to be made in each house flip for real estate investors—if you do it right.
With so many TV shows that feature home flipping successes, it can be tempting to dive in head first. But in order to make money, preparation is critical. So what do you need to know if you want to do it right?
1. Plan Well
It’s important to plan well before you dive into your first house flip. While you can’t anticipate everything that’s likely to come up, preparation can help you to minimize unexpected challenges.
Start with the financial aspects. Make sure you map out a proper and realistic renovation budget, if you don’t have enough funds, think about taking a fix and flip loan. After that calculate your expenses and make sure you profiting on this investment. You also need to allocate a buffer to give you some security if costs overrun.
The older a property the more likely you are to discover problems that need to be fixed, particularly if you’re removing walls and significantly altering the original structure of the house. It’s important to remember that you need this house to generate a profit, and keeping costs down, a firm eye on the budget, and a little rainy day fund is the key to that.
Time is also an important consideration. Flipping a home takes time—perhaps more than you may have thought. If you’re fitting in the work around another job, be aware that there are a lot of things that can contribute to delays. You have to plan for availability longer than you might think.
The one thing you can’t change about a property you buy is the location. You can alter ugly features, change the floorplan and add extra space, but you can’t change the street or the neighborhood. So make sure before you purchase a property that it’s in an area where there is high demand.
Look for a spot near a grocery stores, with good transportation access, schools, amenities and parks. Try and visit the property at different times of day to pick up things about the area that you may have missed on a first viewing.
Getting the right hired labor is also important, and it’s a big part of the project cost. You want to find someone who is reliable, with reasonable costs and a good track record is important. Ask for recommendations from people you know and trust.
2. Make the Right Improvements
When potential buyers are looking for a new home, they tend to focus on the kitchen and bathroom. These are the areas that make a huge difference to the appearance and functionality of a home, so it’s a good idea to focus your renovation budget for the house flip on these areas.
People also really value additional bathrooms, so if you are reconfiguring the original layout, finding a way to add an additional bathroom can really impact the sale price.
Refreshing the basics can do a lot to make a place look new. Repainting in light, neutral shades, and adding new lighting can totally transform the look and feel of a home, creating the illusion of more space, or better defining different areas.
3. Go For a Versatile Design
Try to choose styles and designs that are timeless and to create a space where people will be able to envision their own belongings going. In the kitchen, adding a fresh look with shaker doors creates a classic yet modern feel that will appeal to a wider variety of buyers.
The bathrooms also need to look clean and modern to appeal to buyers. Choose cabinet, countertop, tile, and wall colors that will go with a lot of decor.
4. Boost Curb Appeal to Get a Sale
A lot of buyers will make up their minds before they even come inside. So in order to maximize the home selling price, make a good first impression with a neat outside appearance.
Put in the time to repaint, repair or replace windows and doors, and catch up on yard work. Never underestimate the appeal that some colorful planters, a new front door and an updated doorknob can provide.