Flipping homes can be a fantastic way to earn hefty sums of money within relatively brief spans of time. And with the popularity of house flipping-based reality shows soaring, there’s little wonder as to why so many people have tried their luck at flipping in recent years. If you’ll soon be counting yourself among them, it’s important to understand that not every flip represents a sound investment opportunity. While some flips can prove immensely profitable, others will cost you a lot more than the profit they stand to generate. To help ensure that you don’t wind up with the latter, consider the following pointers when seeking out your first flip.
Consult Experienced Pros
If you have any friends, family members or acquaintances who have experience with flipping homes, you’d be wise to consult them in advance of undertaking your first flip. These individuals should be able to provide you with valuable tips and insight that you’re unlikely to find on reality television. Furthermore, experienced pros can help you identify good flip opportunities and help you distinguish flips that are worth your time from those that are better left alone.
If no one in your inner circle has ever flipped a home, you should consider reaching out to a highly-rated real estate investment company. In addition to pointing you in the direction of house flipping investment opportunities, the right company will provide you with the knowledge and skills to undertake future flips.
Research the Location of the Home
Everyone who works in real estate is familiar with the mantra “Location, location, location!” In addition to being extremely catchy, said mantra is also highly accurate. No matter how nice a home is, it’s unlikely to generate the seller’s desired profit if it’s located in an undesirable area. So, if a potential flip is located in an area with low demand for housing, it’s imperative that this factor into your decision making. In addition to researching housing demand, do a deep dive into growth projections, median income and crime rates, as this will provide you with a solid idea of how much you stand to make from this investment. As an investor, spending money on a flip that won’t generate returns is the absolute last thing you want.
Know How Much You’ll Be Spending
While there’s no surefire way to know the precise cost of a flip before the work is complete, it’s possible to get a pretty good idea of how much you’ll be spending. So, prior to investing in a flip, make a list of all the repairs and renovations that need to be completed to get the home in sellable condition, then proceed to get estimates from the appropriate contractors. Although there’s a good chance you’ll wind up spending a little more than you’re quoted, this is a great way to determine how pricey a flip will be and whether or not it’s worth your time and capital.
Should you decide to go through with a flip, make sure you have sufficient funds in place to proceed with the work. Additionally, make sure to set some money aside for emergencies. After all, if you run out of money midway through a flip, your contractors are unlikely to stick around.
Work Exclusively with Licensed Contractors
Flippers looking for effective ways to save money may be tempted to work with unlicensed contractors. However, while unlicensed contractors tend to charge less than their licensed counterparts, doing business with them may ultimately cost you more than you ever stood to save. Since these individuals don’t have to worry about losing their licenses (on account of not having them), they have less incentive to put their best foot forward, properly manage budgets or see jobs through to the end. Furthermore, since they’re often uninsured, you may find yourself paying to treat any injuries they incur during their time in your employ.
Although flipping a home can be a speedy, effective way to generate a large amount of income, not every prospective flip represents a surefire profit. To help ensure that you don’t get stuck with a lemon or wind up spending more than you stand to make, there are a number of measures you’ll need to take in advance of purchasing your first flip.