“Flipping” Homes – What Does It Mean?
“Flipping” refers to purchasing a property, performing any needed renovations, selling homes as quickly as possible and making as much profit as possible.
Leave Your Emotions at the Door
Emotions can be a valuable asset in some endeavors. However, as it relates to flipping homes, emotions hinder the process rather than help it. If you let your emotions get involved with the process you might find you get yourself into trouble.
Don’t Base Your Actions on Your Own Personal Taste
If you find that you have a natural talent for organizing and managing house flipping projects then you may want to listen to your innate instincts. Bear in mind, the attractiveness of the house is a major concern to your prospective buyers. Do not let your aesthetic tastes influence your renovation of the property too heavily.
Key Selling Points
When it comes to increasing the value of a property, there are certain rooms that carry more weight than others. For most houses, the bathrooms and the kitchens are the areas that influence the most noticeable rises in value.
Therfore, novice home flippers should focus on renovating and updating these rooms so that they match or exceed the expectations of the buyers.
Timeline & Exit Strategy
First time property flippers quickly realize the importance of setting a timeline and adopting a realistic exit strategy. The longer the property goes unsold, the higher the expenses and opportunity cost of missing other opportunities on the market.
Before you even make an offer to purchase the property, you should create a list of the following:
Purchase- What are all your costs by the time the transaction is final?
Renovations- What will the costs be? How long will they take?
Price- What will the new listing price be? Likely sales price & time on the market? It is a good idea to choose a price that will have a maximum of 2-3 months on the market. Pick a realistic price to sell the property quickly.
Net– What is your profit for the project? Be conservative and then save off 10% of the profit. Is it worth the risk, time and energy?
Flexibility is Essential
Any investment can have unanticipated complications. It is important to be as prepared as possible for likely and unlikely circumstances. At some point you will need to adapt in order to remain successful, amidst new challenges.
It is highly suggested you embrace the assistance of a realtor with investing background to help you through the first several flips. This can drastically reduce your risk.