5 House Flipping Tips You Can’t Afford to Ignore
Flipping houses is a great way to earn some cash if it’s something you enjoy. While it certainly takes time and effort, it usually pays off once you’ve put the house on the market and closed the deal. However, if you’re still a little new to this type of investment, you need to take some pointers that will ensure you get a profit from all that money you got from your investor lenders.
Choose Only Eligible Prospects
Never sell a house if it’s still not in move-in condition or you risk incurring more expenses that may hurt your chances of turning a profit. Once you’ve made sure all renovations in the house you’re flipping are done, you need to find eligible prospects or buyers that are more than capable of taking the property off your hands. Dealing with pre-qualified buyers will always give you the best results.
Design for Selling
In every house you flip, your goal is to appeal to a broad range of potential buyers by using a conservative or neutral color scheme when you’re modeling a house. Make sure the design and type of renovations you go for add value to the property and make it look more attractive to potential buyers. Though it’s vital to know your limitations, you can do much of the work yourself if you’re handy and resourceful.
Do the Math
Even if you purchased the property for a low price, that’s just the beginning of your expenses. You still need to take into account all the costs for repairs and improvements. This is where all your contacts from reliable contractors could come in handy. If you maintain a good relationship with them, you might get some discount or deal that could lessen your expenses. After all the renovations are done, you have to make sure the property’s final price is still approximately 20% less than the same houses in the neighborhood. This will help you flip and sell the property as fast as possible.
Put yourself in the shoes of your potential buyers. Would they buy a property located in an unsafe and iffy neighborhood or a reasonably priced house in an established or up-and-coming community? Even in flipping houses, location still matters. If you’re going to spend a lot of time and money on a property to sell, make sure you consider the location it’s in and how desirable it is in the eyes of potential buyers.
Be Over-Prepared for the Costs
If you want to maximize your profits and lower your costs, you need to stick with the 70% rule of flipping houses. The 70% rule states that the fix-and-flip investor should pay only 70% of the After Repair Value (ARV) of a property, minus the cost of necessary repairs and improvements. This leaves you a ton of cushion in case something goes wrong with the transaction. Flips rarely go according to plan, so you need to be ready for it at all times. That 70% will ensure you still make money even if you have to hang onto the property for a few months longer.
House flipping can be a lucrative business if you have an eye for design and a passion for the real estate market. If you’re new to the gig, remember to choose the properties you purchase wisely and always consider costs and location. The goal is to make a good margin, but also sell fast enough to buy a new property and flip again!
If you need some financing to get started on your flipping journey, it’s worth seeking private money lenders who can provide you with assistance. Looking to flip in the Dallas-Worth Forth area? We’re the ones you need!
DFW Investor Lending is the number one DFW private lender in the area. With decades of experience in the Dallas-Fort Worth Metroplex real estate investor community, we provide services that exceed your expectations. If you’re ever in need of a reliable DFW private money lender, don’t hesitate to call us!