When you’re looking for a property to invest your time and money into, look at more than just the location and school district. These are obviously important to potential buyers, but as an investor your focus must also fall on details that would affect your earning potential. For example, check with the city to be sure the previous owners didn’t have complaints filed against them and that liens have not been levied against the property. You don’t want to pay for the misdeeds of others.
Here are four tips on managing your house flip:
1. Have a budget. And, stick closely to it. You want some room for unforeseen challenges, but remember that you are updating a home to a general standard of comfort. You aren’t fixing up the home to live in yourself and therefore don’t go all out with fixtures, materials and upgrades that are going to price your home well out of market value. Improve the home substantially using the least amount of time and resources.
2. Your money is made on the buy, not the sell. You want to get in on a property as inexpensively as possible. You want a property that after being renovated will sell in the mid- to upper range attractive to buyers and still net you a profit.
3. Have a timeline. You need to know you’re timeline before you get started. Time is money, therefore you want to have the home on the market quickly after purchase. This means knowing what work needs to be done, in what order and having your contractors scheduled. And as all things generally go, timelines are prone to getting snagged. So, be sure you’re doing the major work first — like rewiring, flooring, plastering walls. That way if you end up at the end of your budget more quickly than anticipated, you won’t be missing the essential changes needed to sell a house. The new owners can worry about changing paint colors or updating the knobs on kitchen cabinets.
4. Fit your flip into selling season. Another key reason to have a timeline is that you need to have the work done in time for the house to be on the market during peak selling season. Don’t work all summer to have the house sit through the winter when typically home sales are slow. I’ll say it again, time is money.
Bonus tip: When looking at homes to flip be sure to check if the electrical box has been pulled. If the box has been pulled everything (including plumbing and structural issues) will have to be brought up to code before a permanent box can be reinstalled.