Why Flip a House or Commercial Property?

Why? Profit is the most common reason for flipping a house, but for some, that is just a side note.

Do you enjoy working with your hands? Buying a property in need of minor cosmetic repairs is a great way to work with your hands and not risk too too much money, time or effort. Properties needing more serious work require a pair of skilled hands and a strong commitment. If you enjoy doing the work yourself you may find that you can save a great deal of money by using your own labor instead of paying for the labor of others when it comes to flipping a house.

Others get into house flipping because the idea of giving a family a dream home make them happy.  When flip a house properly, you are putting your sweat and tears into building someone else's dream. Taking something that was plain, ugly, or drab and turning it into a beautiful may seem a little romantic and it is in a way.

Then there are those that are simply driven by profit. There really isn't anything at all wrong with that. Most of us would never get into this business if there weren't for the potential profits. This is hard work and there are days that the promise of a pay off is the only thing that keeps you alive.

It doesn't matter what your goal in flipping houses is, what matters is that you show up day after day and do the work necessary to pull off your house flip.

While these aren't guarantees for success they are solid advice that will minimize the risks you face when flipping properties.


Beginners Guide to Flipping Houses

Flipping houses is big business in the world of real estate investment. If you are interested in flipping houses for profit, here is a complete guide to help you make the right decisions. Many flippers have dreams of enjoying the profits that can be made from flipping houses but very few people put much thought into the process or any formulas for success when it comes to flipping houses as a real estate investment venture. You will hear a lot about the things not to do when it comes to flipping houses but very few people take the time to mention the things you absolutely must do in order to successfully flip a house and thus begin your ride on the road to real estate investment riches.

• Do put everything to pen and paper and plan it out carefully before you begin. If you are going to enter into this to make money you need to treat it like a business. This means you need to have a plan of action and make every effort to work towards carrying out that plan.

• Do what needs to be done. You want to create a safe home for the family or person that ultimately makes the purchase. Don't cut corners or hide problems with the house that will put the family that purchases your home in personal or financial risk. Don't take shortcuts or use shoddy workmanship, if you do you may end up with a lawsuit or ruin your reputation so that no one ever buys a house from you again.

• Have a can do Attitude. You must believe you can do this in order to get it done. A house flip is not an undertaking for the timid or those that lack self-confidence. You will need to stand up to your contractors, inspectors, and even some vendors in order to get the best price and the most bang for your buck. In other words you need to believe in yourself and what you are doing in order to get it done. This doesn't mean you shouldn't listen to the advice of those with more experience and expertise, especially when it comes to structural issues within the home and bringing the property to code but you also need to stand up for yourself to insure that you aren't paying for things you aren't getting.

• Have determination. You must be determined to see your project through to completion. It takes a certain type of persion to get through the first few flips. Flipping houses is certainly not an easy way to make a living. It does have the potential to be a highly profitable way to make a living and that is what most potential flippers are looking for. If you want those profits you are going to need to push yourself out of bed even on those mornings when you feel like burning the house down

• Be Excited. This may be the most necessary of all ingredients. You will find that excitement is in short supply many days but it if you can recapture that initial excitement over your decision to flip houses then it will sustain you on those days when the plumber brings bad news or you just learned that a solid weak of rain is forecasted for the weak the roof was to go on.

• If it is not broke don't fix it. There is a lot of wisdom in this age-old saying. There is no reason to go in and fix something that doesn't need to be fixed unless doing so will improve the value of the house to its buyers.

• Avoid over spending money, don't spend money by creating more work than needs to be done. Many people do this by deciding to tackle additions, rip out walls, or changing floor plans. These kinds of changes are best left to the buyer unless they will significantly improve the asking price of  the home.

• Always work within a budget for the entire project. You need to have a plan for how much money you are willing to invest in the property itself, how much for renovations, and how much money you need to make in order to be a worthy investment for your time and labor. You want to have a good idea of how much homes in the neighborhood are worth, the value of your property as is and the estimated value of the property once improvements are made. In addition you should also have a pretty firm grasp of the costs involved in making the repairs in order to create a realistic budget for the entire project. Most people set a budget when planning to flip houses but very few manage to stick with it. This is the difference in making the profits you anticipated and putting the entire project at risk, make sure you get the entire flipping needs accurately quoted, this will help you to stick with your budget.

• Have an inspection. This is the single most important detail that can save you a great deal of time, money, and heartache when everything is said and done. Be prepared to walk away if the inspection determines that there is more work needing to be done than simple cosmetic repairs. You want to make changes that are visible to the eye because these are generally the changes that drive up the cost of the house. You want to avoid needing to make changes and improvements that aren't visible but are very necessary. If you need to invest a lot of money and labor into the house you need to seriously consider the realistic profit potential the property offers. If it isn't significant then you need to walk away before the property becomes a real estate investment money pit.

• Create a home that a buyer will want to live in not a home that you will want to live in. You should never flip a house or design a flip according to your tastes; it is a recipe for disasters in more ways than one. First of all, it is unlikely that buyers will be able to afford it. Second, it will hurt your feelings if a potential buyer rejects any small details. Third, it often raises the price you must seek for the property in order to cover the increased costs of decorating and designing according to your taste.

• Plan your flip according to the needs of the area rather than your personal tastes and needs in a home. This is another thing that many first time flippers forget. This is not a personal project it is a business project and you need to treat it as such. Keep costs down and feelings out.

• Time is money. Remember this in all things. The more time it takes to do the flip the more money it's going to cost and the less money you are going to make. Plan small changes that have a big impact and can be done quickly to get the most out of your flip.

• Never attempt a luxury flip unless you have a luxury budget to back it up. Just as flipping above the market is an unwise move it is equally unwise to flip a property beneath your target market as well. Do not attempt to flip a house in an upscale neighborhood if you can't manage the upscale building supplies and appliances that will be needed in order to make it a success.

• Don't neglect the exterior. Curb appeal is what brings buyers into the property. If you spend all your money, time, and effort making improvements to the interior of the home you will have little left to make the outside appealing to potential buyers. A homebuyer is in the market for the entire package. A home that looks run down on the outside leaves the impression of being neglected on the inside and many potential buyers will never come inside.

How to Find a Great Property to Flip and Things NOT to Do

If you feel you have found a great deal and that the property is a good candidate for a flip you can ask yourself the following questions to help you determine whether or not the property actually is a good candidate. Follow these guidelines when checking out potential real estate investment and house flipping properties and you should be well on your way to a successful flip, at least as far as the selection of the property goes. You should also find a house to flip that you like as you will likely be spending a great deal of time there.

• Have a qualified inspection and determine that only minor repairs need to be made to the property, including landscaping. Every repair that needs to be made will eat into your budget. Complete the project with as little money invested as possible in order to get the most return on your real estate investment.

• Is the property suitable for the neighborhood? For example, is the property a four-bedroom house built for families in the middle of a retirement community or is it a one bedroom cabin surrounded by modern family houses? These aren't exactly a good match and can cause problems when it comes time to sell.

• Can the neighborhood qualify a loan for the price you need to bring in from the flip? If you are creating an upscale home in a marginal neighborhood you are almost guaranteeing a loss on your investment. You should take the time to make sure that the plan you have in mind for the property will match with the other neighborhood residents in order to guarantee a quicker sale. You want to find a house in need of repairs selling cheap in a neighborhood of much better houses to bring in the most profit. If you put a million dollar home in a half a million dollar neighborhood, it will never appraise, whether it is worth it or not, and your buyer will not be able to get a home loan.

• Is the property in a high demand neighborhood, city, etc. for selling properties? Another common mistake is buying in areas that are hard sells for buyers. It is often quite simple to find lower priced properties that are attractive at first glance however; if you can't sell the property you purchase, it will become a nightmare

• Don't forget to set daily goals and hold yourself accountable to those goals. If you don't reach your goals for the day it can set the entire project back by as much as a month depending on the goals and what has to be rearranged as a result. Stick to your timeline and your daily schedule in order to avoid potentially costly delays in time and money.

• Can you make the changes you envision for the house on your budget? You do not want to start knocking out walls or creating additions when flipping a house. That is something you should leave for the new owners. You want to make as few waves as possible and only make changes that will improve the value of the home.

• Can you do the work or will you need professionals and if so, will it still be cost effective? Be careful that you do not overestimate your abilities. It is great to think you can put down a hardwood floor but the reality of doing it another matter. Be sure you have a realistic understanding of the potential costs involved in the flip and whether or not the property will still be profitable in the worst-case scenario.

• Don't blow your budget without just cause. Your budget is what you used to determine whether or not the house would be a profitable venture. If you blow your budget and cannot recover the extra money you've spent in the selling price on the house you will have seriously cut into your profits if not eliminated them all together. Don't spend money you don't need to spend. While it would be great to put in granite counter tops and gourmet kitchens this is often money that will not be recovered, particularly in homes that are in marginal neighborhoods. If you want to get the most for your money avoid costly expenses that aren't exactly necessary for the successful completion of the flip. Resurface bathroom fixtures rather than replacing them and use new cabinet doors or hardware rather than adding new cabinets all together. In other words, salvage what you can, fix what needs to be fixed, and add a few cosmetic touches before moving on. The goal in property flipping is to get in and out quickly and spend as little money as possible in order to make as much money as possible.

• Can you improve the value of the home enough to make it worth your while in a short amount of time? This is another big deal when it comes to a house flip. It takes time and money to make the changes that most "flippers" have in mind for their investment, especially first time flippers. Do you have the time to stick with it and the money to cover the carrying costs while you are in the process of making the changes?

   
The market for real estate is a constantly changin market. Avoid risking too much time and money on a property that isn't going to recover those added touches and expenses. Instead hold onto those ideas for higher end flips once you have a few successful flips under your belt.

Remember that you are in the market to make money, not waste money. You will have poured blood, sweat, and probably more than a few tears into your flip, but don't set the price of the property to high. Have realistic expectations of how much you stand to earn from your efforts and how much you are willing to go down on the price in order to walk away with some profit in your pocket.

You should also take a moment to grasp the fact that many first time flippers actually lose money on their first flip. If you turn a profit at all, even a small profit you have learned many valuable lessons that you can carry with you into future flips and make more money. More importantly the lessons you learn from your first flip are lessons that money really cannot buy so it is worth a lower profit or even taking a slight hit if your experience makes you even more money in the future.