Buying a home and then flipping the home is one of the more straightforward concepts in real estate, but just because it's straightforward doesn't make it a simple task. There's an art to finding the best deals out there without skimping on the quality of the work, and sometimes that combination isn't always easy to spot.
All flippers know that they're trying to find homes that need a little attention before they can be sold at peak market price. But not everyone knows the hurdles that can stand in the way of that dream. Here are a few tips to getting it right the first time.
Start at the End
When it comes to flipping a home, renovators need to first know who is most likely to want the property. They need to consider how the following questions will affect the sale:
- How much will the average buyer be able to pay?
- What kind of features are they likely to value?
- What is the community like?
Watch the Clock
Time is a major concern when it comes to flipping a home. If the updates can't be completed quickly enough, flippers lose money every day the contractors run over schedule. The longer everything drags out, the more money an owner will lose to interest if there is a loan or mortgage to buy the property. Experts recommend fast turnarounds even when a person has purchased the property in cash. Efficiency is the key to finding new properties to invest profits.
There is one major warning though when it comes to a flipper's timeline. Professional home flippers should be motivated to finish their project as soon as possible, but this doesn't mean they should rush into the sale. If the market takes a turn for the worse in the following few months of purchase, sometimes it makes sense to rent the home rather than take a loss.
Those just getting started with home flipping should ease their way into it. Purchasing a simple home that needs $25,000 of repairs can be a great way to explore the world of permits, safety, and negotiation. Even flippers who are planning to do most of the work themselves will need to budget a learning curve into their project.
For example, are city officials happy to help, or constantly throwing a wrench in the plans? Do certain contractors only want to work with certain home flippers? Are real estate agents wary of home flips because of quality issues in the past? These answers are specific to the area in which a person flips their home, so owners should limit their risks at the beginning until they know how to navigate the waters.
Focus on the Foundation
The walls, floors, and ceilings are the structural components of the home that are non-negotiable. So while a backsplash and an open-water faucet are certainly nice to have, they're not as important as renovating these key characteristics. A new buyer may know little about joists and cornices, but they can gauge the sturdiness of a home without needing an architectural degree. If something seems wrong to the buyer, it will be easier for them to dismiss the home without necessarily even realizing why.
Flipping a Clarksville home can be an undoubtedly lucrative way to capitalize on the real estate market. However, there's a reason why not every flipper makes money from their investment. Understanding the basics of flipping can make it easier to forge ahead with the right attitude.
The Ashton Real Estate Group of RE/MAX Advantage
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