Flipping a house is a lot harder than just slapping on a new coat of paint. But it is certainly within reach of enterprising individuals who are properly prepared with the skills and support they need. Check out these five requirements before contemplating your first fix-and-flip project.
A Team of Experts
You can’t be expected to have all the requisite real estate, legal, financial and insurance expertise to handle on your own all aspects of a fix-and-flip, especially as you are under the gun to get the project done as quickly as possible. Your real estate agent will help you identify a suitable property, while your lender will qualify your credit and arrange the funding. Proper contracts and insurance coverage are also handled by experts. Work with proven, experienced specialists like Specialty Lending Group to avoid mistakes and wasted time.
Before buying a property to flip, get to know the surrounding community, as this alone can have a substantial influence on the project’s profit potential. You need to know the predominant features that characterize houses in the neighborhood, including average acreage, type of home, number of rooms, etc. You also need to know your comps, the prices achieved by recent local sales of comparable properties. Don’t overlook any changes contemplated for the area, such as the building of a new school or shopping center, as these changes can reset the local balance between supply and demand.
Your task is to buy a house at a low enough price and fixing it within a tight budget to be able to sell it at a reasonable profit. If you miscalculate the amount of time and money you’ll have to devote to rehab before you can sell your flipper, you might suffer a substantial loss. Not only do you need a comprehensive professional house inspection, you also must understand the costs of materials and labor, as well as local construction and inspection codes, the availability of labor and a reasonable timetable. Your lender must be onboard with your estimates – if there is a disagreement, your lender probably has good reasons for its opinion, so pay attention and learn.
Whether you supply the skills yourself or you hire labor, it pays to do things right the first time rather than paying to do them over after a problem is discovered. Many house-flippers have good DIY skills, and that makes a lot of sense. Doing it yourself is sure cheaper than hiring out, and you can ensure the work is done just the way you want it. If you can install a sink or attic fan yourself, you not only save labor charges, you also don’t have to rework your schedule to meet someone else’s availability.
A Dose of Zen
Things go wrong, take more time than expected, and often exceed cost estimates. A successful flipper must be like a duck, in that emotional upset and impatience roll off your back without causing damage. Avoid overindulging your frustration, anger and greed – emotions can be very costly. Stick to your plan, anticipate contingencies, and keep a positive attitude. That’s how we do things here at Specialty Lending Group, so give us a call today.