Edwardsville Illinois – You must have heard about real estate flipping. Do you know what it is? When you buy a property and renovate it with a purpose to further sell it is called house flipping. Who would want to do that? A lot of people make easy profits through real estate flipping. But it depends on the right property and the right time.
If you are interested in real estate flipping, then read these few tips before going house hunting. A note of caution: there is no guarantee that all real estate flipping strategies work. But it is still advised to follow a few tips.
Tips for real estate flipping
- Do not get emotional
Most first time investors get all emotional about house flipping and forget that it is just a business. Do not attach a high sell price otherwise there is a possibility of getting stuck with the property for a long time and then selling it for a low price.
- Buying a property
Before purchasing any property, research the area in which you want to invest. Sometimes you might find a good deal in your own neighborhood. Then look around for a property that needs upgrades and renovations. The best deal is foreclosures. It can save you money and also make rehab easier.
- Making a first impression
You have to get the potential buyers to notice the innovations and upgrades you have made to the property. Therefore pay attention to all details both inside and outside of the property.
- Personal preferences
When upgrading a flip property, do it according to a buyer’s preferences, not yours. The house needs to be attractive for the buyer. Defining the target market is your choice but decorate the house according to their choice.
- Time is money
In the house flipping business, time is money. Your intentional repairs and renovations to the flip property need to fit a timeline. If you fail to meet the deadline, you might lose the best time to sell the real estate. Therefore, it is better to tackle big projects first then work your way around the smaller ones.
- Hire a contractor
It is not possible for you to remain at the work site all the time. A contractor can come in handy at this point. Provide him with your renovations plan and he can help you keep an eye on the time. A contractor can also identify problems and provide solutions readily.
- Tracking your progress
Throughout the process of real estate flipping, you have to regularly monitor your progress. This way, you will have a complete view of where you stand with your project. In addition, it can help you maintain focus.
- Expect the unexpected
Like in any business, be ready to expect the unexpected. Sometimes you are about to make a good deal, but problems in transfer or ownership might appear or you exceed your budget limit and so on.
Real estate flipping projects can work both ways: success and failure. It is only when you use precautions and experience that you can make huge profits.
- Formula for Success
Its important to use a formula when determining if you should purchase an investment property. Using a formula helps create a cushion price that will help ensure even if (and when) you exceed your rehab budget, property does not sell as quick you thought, taxes, interest etc.
The most popular formula is as follows:
- Establish an “after repair value” of your potential investment. Choose a home that is similar to your home after repairs are complete. Make sure its in a similar neighborhood, size, bedrooms/bath, amenities. In the current market, I suggest that you only consider comparable sales that have sold in the last 3-4 months.
- Multiply the ARV (after repair value) X 0.65 (This will give you 65% of the ARV.)
- Do a detailed list of repairs and estimated repair cost. If you are unfamiliar with repair cost, it will be best to have a construction contractor assist with determining repair cost.
- Subtract the cost of repairs from the 65% of the ARV. This should be you maximum price you should pay for the house.
Contact Jim Nantell from ValuQuest Invest firstname.lastname@example.org
ValuQuest Invest specializes in real estate investments and solutions for difficult real estate situations. We buy homes, pay fast cash, sell your home fast, Edwardsville, Glen Carbon, Maryville, Granite City, Collinsville, Troy, Belleville, Shiloh, O’fallon Illinois, St. Louis Metro East