Fix and flip properties are all the rage right now in the world of real estate investing. However, when it comes to flipping homes, many people quickly discover there is a major difference between first-time flippers looking for some side income and the experienced flippers who run their own flipping business as their full-time job.
For those who are more experienced in flipping and want to make sure they are really doing everything possible to make the most out of their flip, there are a few key tips to keep in mind. These tips can apply whether you’re financing the flip on your own or taking advantage of a hard money loan. Here are some strategies that the most experienced fix and flip investors live by.
1. Have Your Own Team – Trying to hire people on your own or acting as your own sub-contractor is risky and time-consuming – but it is something that most novice flippers have to do. Professionals know that if they want to do their rehabs right, and save time on scheduling and money on fixing bad jobs—they need to build their own team. You need a reputable contractor, a great property inspector, a trusted mortgage lender, and an expert real estate agent all on your team before you start.
2. Do the Big Ticket Items When It Makes Sense – When you are only making a few thousand dollars per flip, you really need to hold back on big fixes. However, experts in this business know that putting money into big-ticket items can pay off, especially if it is done correctly. The biggest ticket item is the home itself. If you have the capital, try to purchase an outdated home in a luxury neighborhood and be ready to put in luxury finishes and fixtures that meet the standard of that area. You won’t be able to cut corners on these flips, but you will be able to make money if you keep your investment amount low.
3. Go for the Worst House in the Best Neighborhood – This is a tip that applies to both novice and expert flippers, but it is one that expert flippers should never forget. Remember that not many other factors can compare to location, and you’re after repair value (ARV) will be much higher in a neighborhood where other homes are selling for top dollar. After you make renovations, your home will sell at a similar price to others in that neighborhood. These deals may be harder to find; however, it is a great tactic to ensure a good ARV.
4. Always Add a Few High-End Features in Your Home – No matter what your price point is, you should always add just a few high-end features or upgrades to the property which will add value to your flip. Some flippers have a signature high-end addition, others just work with what is going on in the property. Whether you add higher-end appliances, statement lighting fixtures, or a smart thermostat, one or two high-end features can really make a difference.
5. Leave More Room Than You Think for Unexpected Costs – This is one thing that any expert flipper understands—if you’re under budget and leave even more room for unexpected costs, you will end up with higher profits. This way, you not only have the money you need for those surprises (and they will happen) but you also won’t have to take money away from other aspects of your flip. It will keep you on budget and it will prevent you from cutting corners on the small things that can really make a flip stand out.
6. Details, Details, Details – People buy flipped homes because they want something that is already done, finished and ready to move in to. This is why the details are so important. You want everything from the toilet paper holders to the towel racks to be finished—serious flippers know what serious buyers are looking for in a flip, and that is convenience. Don’t forget about all of the little details that take things off of the buyer’s plate.
Whether you are looking to take your novice flipping efforts to the next level, or want to make sure that your current flipping business is staying on track, these tips should help. Follow these guidelines and always remember to keep the bottom line in mind.