Flipping a house can be a very profitable experience, but it is a lot of work to get to that point. Making mistakes along the way can cause that potential profit to dwindle. Here are a few tips to follow if you plan on buying real estate to flip.
Buy The Right Kind Of Fixer-Upper
While your goal is to buy a home that is cheap and put some work into it, you do not want to buy a home that is too cheap because things are wrong with it. This often happens after a home forecloses, and the previous owners start to actively sabotage their home to take as much stuff from it. This includes removing appliances, light fixtures, and creating damage. These problems can easily set you back well beyond the point of profitability, even if the home is dirt cheap.
Your best bet is to find an ugly home that needs to be fixed up, where the problems are essentially eyesores that you can easily fix to make modern. This could include outdated flooring that you can replace, a kitchen that hasn't been renovated since the 70s, or a home that has virtually no curb appeal. Be cautious of homes that need major work done to bring the home up to code.
Set A Realistic Timeline
It is important to have a timeline for how fast you're looking to flip the home, and factor that time into your budget. Each month that you are in the home is a month where you are paying mortgage interest and real estate taxes. If you make your timeline unrealistically short, you could find that the timeline increases and eats into your potential profits.
Line Up Your Contractors Before You Buy
The time to start doing your research on which contractor you are going to use is before the home is purchased. You want to have contractors lined up that can start as soon as the first day that you own the home. If not, you're wasting time where the home is sitting empty.
Don't Invest In Things You Can't See
When making improvements to a home, always invest in things that you can see. That is because potential buyers are going to notice these things immediately before they make an offer on the home. Spending money to put more insulation in the attic may improve the home, but a buyer is not going to notice it and not pay more money for it. Stick to visual improvements that make the home more appealing.
For more information on how to buy real estate, contact your local realtor.