Home prices have been escalating, while ‘for sale’ listings are still down. This given state of affairs makes flipping a house much more competitive than ever before. Also, it can present a significant return for those investors willing to go for such real estate opportunities. If you are ready for the hard work, there is certainly good cash to be earned. Here are 5 important things to know/remember when flipping a home: .
- Do your math well beforehand
Prior to doing anything else, take all the time you need to figure out just how much you will have to spend on the house and its eventual renovation. Never forget to factor in the exact risk you are ready to take. Not to mention taxes, utilities as well as the necessary maintenance for at least a year. Then take a look at comparable sales in that particular market to let you determine what sale price you should ultimately settle for. The minute you have a strong financial plan, you can commence shopping for homes, which fit into your budget.
- Take time to understand your market well
Always make sure you totally comprehend your market. This will go a long way in enabling you to pick the most desirable’ home. Ask yourself the following questions. “Is it an established neighborhood with escalating prices?” “Or is it a transitional area with great potential?” “Is it a neighborhood with excellent schools that can appeal to families?” “Or is it an area popular with retirees?” Taking time to understand your market will give you a good idea on the profit margins involved. Generally speaking, each neighborhood comes with an “exceed-not’ limit. Therefore, find out more about yours.
- Understand the type of buyer you want and renovate the home with them in mind
By comprehending the market, you will also be able to discover just what kind of potential buyers you will encounter. For instance, if the area comes complete with excellent schools, the buyers will most likely be a young families. If this is the case, older houses may not come with open kitchens or family rooms, which such purchasers usually look for. So, spend your cash to ensure the family space is both open and inviting too. Don’t to forget to ensure the home has adequate bathrooms for the children. You might like to invest in a “Jack & Jill” in the hallway bathroom as well. On the other hand, don’t be too preoccupied with the master suite. Still, ensure the parents do get their very own bathroom.
- Take all the time you need to educate potential buyers
Once all the renovation work has being completed, take time to sit down and make a list. In it, disclose each system you had replaced or any structural issues you had to deal with. Take a snapshot of the new roof you had installed and also indicate just which windows are new. List down new appliances along with fixtures you installed too. Finally, present potential purchasers with a binder crammed with instructional booklets that come complete with warranties. If you invested in any smart home features, make sure you have instructions conspicuously displayed next them. All in all, make sure that potential buyers get to find out all about each and every detail.
- Don’t be tempted to overprice the home
After contemplating your work and taking into account the “sweat equity” that was involved, you may be tempted to overprice the home. However, always remember your buyer, never saw it at the start. They also have no idea of the stress the renovation exerted on you. All they will get to see is the end product. Keep in mind, they have being going through the market, and taking tours of comparable homes. Each area has a general pricing point. So, don’t extend beyond yours.