The housing market is approaching record high prices, currently dictating many opportunities for investors. This allows sellers to make huge profits. If you are considering buying and flipping homes or doing total home rehabs as a career, there are things that can affect your profits.
Funding the Project
If you have money in savings that you want to use to avoid borrowing from a bank or another lender, you can use it without paying interest and other closing fees. However, not everyone has large sums of money available. For this reason, many investors opt to use other people’s money for the short term. For example, if you live in Southern California, a quick search for rehab loans San Diego can provide you lenders and, by extension, funding in a matter of days.
Creating a Spreadsheet
Whether you want to take on a fixer-upper or a total home rehab, time is always of the essence. Any unexpected delays will reduce your profit. Creating a spreadsheet will allow you to keep moving the project forward. Use this spreadsheet to place time frames for major to minor repairs in chronological order. Listing the contractors in the proper order is essential to prevent having to call one back to complete work before another one can start.
Hiring Qualified Contractors
If your first home purchase is one that needs just minor repairs and you’re handy, you may be able to restore the home without hiring contractors. However, if you plan on buying a home that needs major work, finding qualified contractors is necessary. Ultimately, you should find these individuals prior to your first purchase so that everyone is available to get to work when you need them. Many investors find contractors on websites, job sites, or through a referral. It’s in your best interest to select a few and then meet with them one-on-one to make sure your personality is a good match.
Keeping Costs Minimal
With your first home flip, you may want to go all out and restore a home beyond expectations. While it will appeal to potential buyers, doing so will reduce your profits. The best approach is to have a realtor and a home inspector assess the property and then keep the renovation in line with their numbers. Putting in premium flooring and other amenities will make it much harder to turn a profit. It’s also important to maintain a neutral color palette and refrain from designing the home to your liking. The added color and customized appearance may not suit the taste of those in the market for a home.
Location, Location, Location
Just like purchasing a home for yourself, finding a property in a desirable location will make the selling process quick and painless. Finding a foreclosure or a property in neglect that a family wants to unload fast for short money benefits you. However, you also have to keep in mind the real estate values of the neighborhood. If you buy a home for $40,000.00 and you list it for $150,000.00 in an area where the homes average $125,000.00, you won’t get the sale. The longer you sit on a property, the less you make.
Knowledge Is Power
You may know someone who flips homes for a living and is successful. Unfortunately, there’s a lot of planning that goes into the process, from start to finish. Professionals in the business know when to bid on a property and when to walk away. They make a checklist of all the repairs ahead of making a purchase to see if the property is worth the investment.
If you are serious about switching careers to buy and flip homes, make sure to consider everything. There is no guarantee of a quick sale and anything that delays the completion will cut into your profits. It’s important to weigh the pros and cons ahead of time.
Justin Malonson is the Founder of LyfeLoop a 16+ year tech innovator, investigative media researcher and host of the Freedom Not Control Podcast live on Voice America. Justin is a highly sought-after tech entrepreneur, industry speaker and winner of the coveted Business Achievement Awards “Top Digital Marketer” award. With 16+ years of demanding experience, Justin has worked with over 3,000 businesses including amazing clients such as Blue Cross Blue Shield Association, Sotheby’s International Realty, Duke University, White House Black Market,Tiffin Motorhomes, Bass Pro Shops and Beazer Homes USA.