So you say you want to get into flipping houses, well here is a list of house flipping tips that you should consider before you get started. If all you have done is watch a marathon weekend of “Flip this house“, you haven’t even begun to get ready! To be successful at flipping houses, there is a considerable amount of prep work that you need to complete before you ever begin to make offers on houses. You should be able to answer the following questions with confidence:
- Do you know what type of flip you are going to do? Read my article: “What type of Flip are you doing“. The type of flip will determine how much prep work you need to get done.
- How are you handling the financing for the initial purchase of the property as well as the renovation expenses? Do you have an emergency reserve, in case the house needs an unexpected and/or expensive repair or it takes longer than anticipated to sell? If you are planning to do a “Flip and Hold”, your financing should be slightly different to allow you to recoup your renovation costs and roll them into permanent (and possibly less expensive) financing.
- Have you researched various neighborhoods and do you understand what price range is selling (and which is not) in your target neighborhood? You know that you are ready on this point when you can walk up to a house for sale and name the price before looking at the Realtor flyer or on the MLS. Your flip profit and your on market sale time are dependent upon you very accurately understanding the price range you are targeting with your completed flip.
- Have you interviewed various contractors that you may need for the various phases of the project such as: plumbers, electricians, carpenters, landscapers, etc? Are they available to start when you need them? Do they know they would be working on a flip (I have found some contractors that hate working on renovations). Do you have back-up contractors in case your first choice is not available or does not show up?
- If you are planning to do most of the work yourself, have you mapped out the project time-line and overlaid that with your availability? If you are not working on the house, it is sitting idle, and the interest clock is running on your loans. Do you have buy-in from your significant other that you can spend that amount of time working on the flip?!
- Do you know how much new cabinets generally cost or what a new tile floor costs per square foot for the tile you want? How about any of the other materials you will be installing? Although each flip is different, if you understand what price range you are targeting and what type of flip you are doing prior to finding the house, you should be able to do some early materials selection. This will help you when you prepare your budget when putting your offer together on a prospective flip. (It is also easier to be prepared with all those selections now instead of making them in a rush once you are in the middle of the flip.)
- How are you planning to sell the completed property? If you are using a Realtor, have you identified him/her? If so, plan to include them in the property selection, the scope of the renovations, and material selection. If s/he has to sell it, make sure the Realtor is confident in the price, materials, and property. If you are selling it on your own, what are you doing to market the property once it is completed to generate interest?
The answers to most of these questions are not difficult. You would need to have answers to all of them eventually, so why not take the time up front to do the research and make the best possible decisions you can? I hope you enjoyed these thought provoking house flipping tips.
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