Real estate investing markets are hot right now. When for-sale listing prices remain low, and the home prices increase fast. There's an excellent opportunity to flip a home and receive some profits in the process.
In today's market, you can make a significant income in a relatively short period of time. If you're willing to bust tail and put together a plan of action, there's never been a better time to make things happen. Let's talk about five tips that can make a difference when it comes to flipping homes. This information can be beneficial for somebody who's newer to flipping and may want to build equity so they can eventually become an accredited investor.
1. Figure Out The Math.
The first thing you want to do is sit down and figure out a financial plan and measure the risk you're willing to take. Determine what money you have available for the purchase of the house and the renovations combined. You want to be very specific here and try and make it within a 5% margin of error right down to the dollar. Your math should include the price of a short-term loan if that's the route you're going to take. Determine the amount of the utilities and maintenance for up to a year. Include what you'll pay in taxes for the year. List out the material cost including a buffer of 5%. Get an accurate price on labor with a detailed estimate of a time frame. After you've compiled all the numbers and know where you stand, then it's time to go out and shop for a home.
2)Have A Clear Picture Of Your Market.
Determine if you're going to focus on an established neighborhood or one that's more traditional. A community that has been around for a bit can offer great value because those homes tend to rise quickly in price. An area that is relatively new where people come and go frequently may provide a more significant challenge. The pricing in neighborhoods with a lot of turnovers can reach their limit quickly.
3)Understand Your Potential Buyers.
If you're in the neighborhood with excellent schools and parks, picking up a two bedroom home may not be the best idea. However, if it's a spacious two bedroom home with two or even three baths, it might be worth looking into adding a third bedroom. If it's a very established neighborhood and a lot of people are downsizing for retirement. Depending on the size, you may be able to turn these bigger homes into a multi-family dwelling.
4)Help The Buyer Understand Value.
You have done a ton of work to make this project all come together. You've been involved in the process utilizing a mentor every step of the way and know it inside and out. Having this experience is a significant advantage because you can help educate your buyer and do it with confidence. You can do other things to help communicate the value to your buyer. For example, you can show before and after photos of the roof or the new windows. When you show the depth of the work, the buyer will likely be more invested too. They'll have a clear understanding of what they're purchasing.
5)Correctly Pricing The Property.
You do not want to price yourself above the general price of the neighborhood. The buyer will still take a bit of time to become as invested in the project. After all, they didn't go through all the effort you did while renovating the home. They're only seeing the finished product and the photos you've shown them of the transformation. If you price your project too high it can take a very long time to sell. On the other hand, if you price your property within or just below the general pricing in the area, you may get multiple offers. With multiple offers coming in, you can then bid up the price. This technique is valuable and can be used to your advantage depending on the demand in the area.
These are five fantastic tips you can use to increase the value of your sale. They do not take much more time on your end, but they do reap more substantial returns when implemented.