If you’re interested in flipping houses for extra income – or a primary income – there’s likely to be a phase of testing the waters. But while you get on your feet, there’s no need to leave things to fate or trial and error. There are three main rules that all fix and flip investors should stick to in order to see results.
Never invest without extensive research
As with any investment, it’s crucial you do your research before taking the plunge. And this is particularly important for those looking to flip houses for a profit.
There’s research to be done regarding the local area, how much your property will cost and what types of renovations you’ll need to do.
By being able to identify a property with ‘good bones’, you’ll save yourself plenty of time and money on refurbishing and repairs. Looking into what the local area is like will help market the property to all the right buyers and give you a better idea of how much you’ll be able to get when you re-sell it. For example, if you manage to find a house to flip in an area with good transport links or a local school, you’ll likely be able to make a nice return on your investment.
If the local housing market is a little stagnant, with properties taking quite a long time to sell, this might not be the perfect place for your first project home. In order to keep your momentum, it’s worth finding a house that’s going to sell quickly, for much more than you paid for it, so you can move on and buy another property.
Invest low, to profit high
One mistake new investors often make is overpaying for a property they’re going to flip. Fixer-uppers are much more desirable for younger people, which can sometimes increase the asking price. Finding low priced homes that don’t require much renovating is the ticket to high profits.
Once you’ve actually bought the property, it’s then key to keep upgrades and renovation costs to a minimum in order to make the highest return on investment. If you’ve spent your savings on the property itself, you might want to consider applying for a loan with Sachem Lending. That way, you can make the repairs and renovations the house needs and pay it back once you’ve sold.
Remember you’re buying for others
Whether it’s certain features in the house or color schemes and materials used for refurbishing, you need to remember that the aim is to appeal to the masses rather than to your own personal tastes. Fix and flipping is a business, so you need to work on the house with an impartial perspective. This is why understanding the market is so important; knowing what features newly sold homes had will help you decide on which renovations need to be prioritized, rather than which ones you personally think are important.
With these three rules, you should be in a good place to make business-lead decisions that leave you with a great profit.