If you’re looking for good ways to beef up your portfolio or build a healthy retirement fund, flipping houses may come to mind. House flipping can be incredibly successful, to the tune of $72,450 in profit on average.
Flipping houses for profit is “easy”, at least according to the television shows on the subject. However, reality can be quite a different thing.
If you jump into house flipping without the right preparation, you might not get the great return you’re looking for. Keep reading to learn about three essential things to know before you try to flip!
Check Your Figures Closely
Before you even start to look at houses to flip, you need to know your budget – down to the dollar. If you overspend on the house, your budget may not allow you to renovate properly, and this will prevent a successful flip.
Consider how much you feel comfortable spending on the entire project before you start looking. This includes the money you can spend on the home purchase as well as the money you can spend on the renovations.
Shop for a house that meets your budget – but shoot for something a bit under the top end of the budget. Renovations often get more expensive than anticipated.
In fact, you’ll need to have a contingency plan for situations in which the budget is exhausted. This may happen with regularity in home flips. Often, the home may have structural issues or other problems that aren’t even known until you’re well into the renovations.
Be Mindful of the Market
Knowing the current market is absolutely essential for successful flips, but beginning flippers often overlook this critical need. Take a look at the recently sold homes in the area to see what type of prices they sold for.
Look at the prices for area homes over the last several years, or even over the last decade. Are the prices on the rise or on the decline? Always invest in well established markets if at all possible.
If you want to invest in up and coming markets, be sure that you choose a market that is already demonstrating upward growth. Sometimes a certain area will have a lot of potential, but that potential may never be realized. Don’t invest in potential – invest in demonstrated results.
Learn About Your Target Demographic
Learning as much as you can about your target demographic is always a good idea prior to a flip. If you’re looking at flip homes in a retirement area, the potential buyers may be less concerned with square footage and more concerned with high-end finishes.
However, if the neighborhood you’re flipping in is populated by young families just starting out, high-end finishes may not be the most important thing. Young parents may be more worried about having plenty of bathrooms and bedrooms for the kids.
Do as much research as possible on your target demographic to be sure about what they tend to look for, and remember this target buyer as you renovate. Remember, your own preferences are exactly that: Your own. What works best for you may not be what your buyer will want, so strive to catch the buyer’s eye and engage their imagination.
Flipping houses can be not only profitable but incredibly fun. Put the tips listed above into action to create a successful flip that will help you launch your new money-making enterprise!
