House-flipping: Rules for success

In simple terms, house-flipping is the process of buying a home and reselling it after renovations. House-flipping is a significant personal and financial commitment, so it’s important to put a lot of thought into your decision. To reap the rewards of flipping a home, you’ll need to learn a lot about the ins and outs of the process. Below are some tips for success if you’re thinking about pursuing this real estate investment.

Do your research

Research is the most important part of flipping a house, and can be the deciding factor between success and failure. Before making the decision, consider all risks and potential rewards. Do the rewards outweigh these risks in regard to your personal financial standing? Research and learn everything there is to know about house-flipping, including stories of other people’s experience. This can help you think of potential roadblocks you may not consider yourself.

Crunch the numbers

Take the time to figure out what you can spend on both the house and renovations. It is also important to factor in any short-term loan costs, as well as taxes, utilities and maintenance for up to one year while you own the home. Look at comparable sales in the market and see if these sale prices are close to what you expect to earn. Develop a financial plan with a reasonable margin for risk and begin looking for homes that meet your budget. Be sure to consider all renovations and associated costs so that you don’t encounter any unexpected problems.

Tailor your renovations

Think about who your target buyer is and renovate the home based on their expectations and desires. You may want to ask around and gather feedback from your target demographic regarding what features they would like to see in a home. Plan to stay consistent throughout the process, so all updates work to meet the expectations of this particular group of buyers.

Know what to look for

Before buying a home to flip, make sure you consider all aspects that buyers may look for. Location is a significant part of this decision; find a home in a desirable neighborhood. Homes in good school systems also tend to sell more quickly, based on both buyer demands and resale value. Also, consider how close the home is to you. Keep in mind that you will be spending a lot of time driving to and from the house, so you’ll want a place that is convenient.

Let agents and buyers know what you did

After you have put in the work and you’re ready to sell the home, make a detailed list of all completed renovations. Let potential buyers, as well as inspectors and appraisers know the work that went into the final product. Most buyers will appreciate the new features and fixes that they will not have to complete themselves. It might also help appraisers suggest a price that reflects the updates.

Set the right price 

When all is said and done, let an agent help you decide the right price for your home. You spent a lot of time and effort making the renovations, so it’s important to price it right. Agents can help you market the home and the updates, as well as provide helpful guidance through the selling process.

If you would like more information about house-flipping, or to speak with an ARC agent, feel free to give us a call at (205) 969-8910.