Thinking about flipping homes? Rehabbing a home can be an extremely lucrative pursuit if it is approached with caution, understanding, and a little bit of insight knowledge into the inner workings of the industry. Your first flip might seem like an insurmountable task but arming yourself with a few key tips will really make a difference to the outcome. It can certainly help you produce the kind of profit you’re looking for. Let’s look at a few wise words to consider.
Think Carefully About Remodeling Choices
The fix and flip is often seen on television as a great massive overhaul of the home’s interior and exterior designs, bathrooms, kitchen, etc. This makes for great entertainment, as the full transformation of a home is something to witness. However, when dealing with a flip in real life, it is important to note that over remodeling it might not necessarily bring more profits to you as the flipper. As Forbes magazine points out, remodeling takes a lot more time, money, and resources. Embarking on complex remodels will often open the doors for more issues to arise.
- Tearing into walls can lead to more problems. When digging too deep you might run into a problem you didn’t bargain for. Also, a mistake by the contractor can extend the timeline.
- More time more money. Another reason why spending an extended amount of time on flips is not advisable is because the more time you spend on it the more money you will be spending and possibly losing.
- The changing market can make a difference. If you hold on to a house for too long, the market may change and alter your original calculations, pricing, etc.
- Keep it simple. Experienced house flippers have said that keeping the repairs and remodels simple is the best way to go. Completely changing the bathroom or kitchen will not necessarily pay off at the end. Keeping the changes to what is necessary is a wiser investment choice in a lot of cases.
Some possible risks
There is no shortage of date or factors you can consider when flipping a home. This doesn’t mean you have to fully learn the industry but only be aware of certain things that can impact the way you approach your flip, how much your renovate, how much you spend on repairs, and how quickly you get it back into the market.
Consider market trends. You don’t have to be a real estate expert to look for some big patterns on market trends. You can check in with a multitude of sources —like realtor.com, Joint Center for Housing Studies of Harvard University, neighborhood price ranges, local MLS statistics, census.gov, even social media— for updates on the market. This will give you some insight into demographic shifts that can impact the price of the property you are looking to buy.
Look at changing interest rates. The interest rates on home loans are always important to consider. The interest rates might tell you something about the prospective buyers for your planned property.
Valuation. This is a critical part of the flipping process. Carefully considering and estimating the price of the finished product. What is the After Repair Value (ARV)? Get a good idea of what the selling price will be before you make an offer to purchase the property.
Choose contractors wisely. In a previous post, we talked about the importance of choosing the right contractors. Doing some research, weighing your options, and calling around, will go a long way when it comes to choosing a reputable and trustworthy contractor.
Ready, Set, Flip!
ATTOM, the real estate data company, reported the average profit on house flips can be up to $65,520 in the second quarter of 2018. Of course the number varies on whether you are doing a lower price range flip or a high-end flip. If you’re ready to embark on the flipping journey, a hard money loan might be the solution for you to get started fast. We don’t do credit checks and you can hit the ground running asap. Give Entrust Capital Funding a call today.