It seems that everyone wants to get into the business of flipping homes thanks to the home improvement shows on HGTV. Flipping homes is not an easy business. It takes a great deal of planning and patience, especially when it comes to securing funds for the project. When a person flips a house, it is usually one that needs some work done on it. For example, the house could have a serious leak from a water pipe that caused drywall damage or a crack in the foundation. Normally, a homebuyer wouldn’t even consider buying a home with these issues. That’s where companies that specialize in flipping homes come in. They have the experience to know what to look for in terms of what needs to be fixed or rebuilt. If you are a novice in home renovation, below are some tips to help get you started.
Check out the real estate market. You need to make sure you have the cash for the home you want to renovate. The amount of cash you have dictates your price range. You should also know the comps and the type of neighborhood your home is in. There are four classes of neighborhoods that can affect your purchase and/or profit.
Class A – A wealthy neighborhood. The homes are large and lavish.
Class B – A step below Class A, where the homes cater to middle-class incomes.
Class C – These are “working class” neighborhoods. The homes are in good shape and smaller than Class B homes.
Class D – As you guessed it, these neighborhoods aren’t in good shape. The homeowners do not care for their properties and earn the least compared to the other classes of neighborhoods.
Create a workable budget. Once you have determined your price range, you need to set up a workable budget, meaning a budget that flexible enough to handle unexpected costs. You should have a budget in mind before purchasing the home. This also includes a business plan, especially if you are financing the project.
Inspect the property. Once you have chosen a home, check out the property for any land or structural issues, including trees that need to come down or a crack(s) in the foundation. It is always good to have an engineer check out the foundation and/or check the load-bearing walls (most likely you will want to remove one of them). Be sure to check the plumbing, HVAC and electrical. Updating the plumbing and electrical to code could cost thousands of dollars. Also, you should get a home inspection while you are under contract.
Shop around for your materials. Make sure you research the best prices for your materials, such as countertops, fixtures, and flooring. Cultivating good relationships with vendors could result in discounts. You can also save money by buying off the shelf in home improvement stores.
Get a good contractor. If you aren’t doing the work yourself, it pays to hire a reputable contractor. Many “flippers” partner with a contractor because they know the contractor’s work and the contractor gets additional business.
If you are new to flipping homes, you should seek the advice of a seasoned real estate professional. It could save you time and money.