Here are five things to consider before you buy and flip a house.
Have you ever wondered what it takes to flip a house and make it profitable? Today we’re going to walk through five things every successful real estate investor does to go from acquisition to a profitable closing:
1. Know your product. You need to know what the home will be worth once you fully update. This is called the ARV or after-repair value. Quickly diagnose all repairs and updates you need to complete after an inspection and be realistic with your expectations on resale value.
2. Find the right contractors. You need contractors who are reliable, quick, and prompt. Stick with similar colors, patterns, and appliances with each flip.
3. Know yourself. It’s best to start small and work up to bigger projects. Every project will have unforeseen issues, impossible delays, and budget overruns. Assume you’ll go over budget up to 25% on your first few projects.
“Be realistic with your expectations.”
4. You make your money when you buy a home. You need a detailed rehab budget and a confident ARV. Then, you can back-end all of your costs until the home sells to determine an acceptable maximal return to purchase any investment you are looking at.
5. Know your wallet and your risk tolerance. We work with many types of investors. Some use their own cash to finance these projects, while some use other people’s money. Some lenders will finance these projects for you, but you need to factor in the extra financing cost into your overall budget.
This is a general overview of the buy and flip process. If you would like to get started or learn more about the process, please reach out to us here, or give us a call at 952-222-9000. We’d love to help you with your next flip.
