Flipping a house generally means renovating a rundown house and selling it for a profit. While this has been a very profitable trend for decades, and thus rife with experienced house flippers bent on stealing every last property out from under the noses of novices, there is still a chance for newcomers to make a decent profit from selling renovated houses. But, of course, there is a lot to consider in order to milk the house for all its worth while minimizing the expenses.
Acquire your target.
The one thing that makes the difference between a large haul and having to sell for dirt cheap, is the kind of house you choose. More specifically, everything surrounding the house you choose. When browsing the market for houses, the main thing people look for is the availability of necessary facilities like healthcare, places to shop and places to hang out. Because the reality is, most people only spend their nighttime within the house, and so even if you try to sell them a palace for a few grand, if it’s in the middle of nowhere no one will want to buy it. So make sure you scout the location and make sure you’re buying a slot in a good neighborhood, not just a lump of wood and cement.
Conduct a feasibility study.
The next most important thing to do is to find out what repairs need to be done, what features will be added, and how much it’s all going to cost. While doing this it’s important to keep in mind that the renovation could take up to several months, and the cost of repairs may increase beyond your budget during that time. A common safety measure taken by professionals is to add an extra 10% to the estimated amount, so that you will never run short.
Also, if you’re new to this, you MUST hire an experienced contractor to work out the estimates, because doing them yourself without any prior experience is a recipe for failure.
Assemble a regular crew.
If you’re planning on doing more than a couple of house flips, paying for independent contractors will cut down on your profits and quality of work in the long run. The best thing to do is to assemble a crew for all the major renovation activities. A decent quantity surveyor and a team of masons and an electric technician are a must.
In addition, even though a contracted painting organization might offer a more efficient paint job, if you find a couple of decent freelance house painters and give them the proper tools, you can probably get the job done for cheaper.
Also, after the first few gigs they will get a feel for the job and you’ll have the results of a professional house painter.
Use decent stuff, but don’t overdo it.
A major mistake novices in the business make is using low quality materials for repairs, thinking that once the deal is closed the clients will be left to deal with the aftermath, and that they’ll be able to make off with a hefty profit. But the problem lies in the fact that in this day and age, word spreads fast. Once it gets out that your team has a habit of conning your clients, your next gig could turn out to be a devastating failure when it’s time to sell.
Still, try not to go overboard by buying the most expensive stuff the market has to offer, because buyers will most likely refuse to pay enough to cover your enormous resulting expenses.
As with all things, house flipping is an art that can only be mastered with practice and clever decisions, so keep at it even if your first deal doesn’t bring in much profit.