When it comes to real estate—especially buying and flipping houses and properties—there is money to be made whether you’ve been in the real estate business for a while, have just used a tagline maker to come up with the perfect slogan for your new company, or are trying it out on your own. With strong housing markets throughout the US, house flipping is on the rise. In fact, it is at the highest it has been in more than a decade. As of last year, over 207,000 homes and condos were flipped, totaling over $16 billion for the purchases of homes that were flipped.
The rise in the number of homes being flipped is due, in part, to the opportunity in the market, the creativity of the work, the money to be made, and the influence of shows like Flip or Flop and Fixer Upper. Not all houses are easily flipped or resell well, though. There’s more to flipping properties than just buying, fixing and painting, and relisting a house on the market—you have to find the right house to flip in the first place.
Whether you run a business, have just launched a startup, or are interested in trying flipping on your own, the following tips will help you find the right house to flip so that you can have the highest potential for profit.
Make Sure You Have all the Resources You Need
Before you start flipping houses, it’s important that you have the cash or loan that you need to make a purchase, that you have a good team behind you to get the necessary renovations done, and that you have the cash you need to purchase the items for the reno. Before you even start watching the market, find a team that you can trust to do the job well, do it on time, and do it in the budget. Although you might be hoping that the profit from the sale will cover some of the costs, you should never rely on money you don’t have to get the job done.
Whether you’re looking for a house to make your home or for a property to flip, the location of the house matters. People want houses that are located near good schools, surrounded by other houses that are well taken care of, and that will give them easy access to the freeway and shopping. While one house may not have it all, it’s important to find one that has as much as possible. Nobody wants to move into a crime-riddled neighborhood, especially one that is well off the freeway.
Do a Though Inspection Before Making a Final Decision
It’s easy to see the surface issues that are a simple fix and fall in love with a property you’re considering flipping, but if you don’t do a thorough inspection before you put in an offer and close the deal, you could end up in serious trouble. Some houses may have what look like cosmetic blemishes on the surface that can easily be fixed, but once you get into them and start going through things, you could find that all of the electrical and plumbing is bad, requiring that walls be knocked down and everything be redone, putting you over budget and past your projected completion date.
Consider the Comps
Not only do you need to ensure that the location is good and have a thorough inspection done, but you should look at the other houses in the area and consider what they’re worth and what they’re selling for. If you find a house that needs some pricey renovations, but those renovations will put it too far over the market value of the other homes in the area, you could end up with a property you can’t sell or that you have to take a loss on.
Always Leave Extra Room in Your Budget
When searching for houses that you can flip, you will likely find some that are well within your budget as well as some that push it. While it may be tempting to push your budget to get a bigger house that will hopefully bring a bigger return, it’s important to avoid stretching yourself too thin by leaving plenty of room in the budget you have. Once you get into a house, you may find that it requires more work than you though, you may have to pay some extra fees, or you may find yourself wanting to spend a little extra on certain features, so having that wiggle room in your budget can be a big deal.
With strong housing markets across the US, there are plenty of opportunities to make a big profit flipping houses. Having success flipping houses, though, requires that you find the right houses to flip. From choosing properties in a good location to ensuring you leave extra room in your budget, you will be able to make the most of the property you flip.
What about flipping houses interests you most?