Flipping houses is not a new concept, but with the recent popularity of so many TV shows and the potential for a massive profit, more and more people are jumping on board to try it out. We work with a lot of folks who are in this business; with varying results. If you’ve been thinking about buying a home, cottage or condo to flip, here are a few helpful tips to help you decide if it’s right for you.
1. It’s not for the weak of heart
Flipping properties involves financial risk and there’s no guarantee you’ll make money. Further, if you already have a full-time job, a house of your own, kids and other obligations, make sure you have the time, resources and stress-management skills needed for this type of fast-paced work. You’ll need to be able to manage finances, purchases, contractors, and so much more, on top of what you already do. Time is of the essence when flipping a home, and while some experts can do it in a month or two, it’s typically much longer. Every day that the house isn’t finished it’s costing you money.
2. Know the real estate market
While interest rates may be low at present, home prices aren’t. You’ll need to be sure you’re getting a good deal on the property you’re purchasing, and know the projected market when it’s time to sell. For example, if the home will be renovated and ready to sell in December, when buyers just aren’t as plentiful, you may have to wait until the spring market heats up to see a profit.
3. Work with a good lender
Make sure your lender is reputable and also experienced in financing house flips. They’ll have a good idea about what’s involved, and can help guide you on what to expect. Some interest rates for house flips can be higher than your average mortgage, so be sure to shop around and understand the financial end of things.
4. Have a plan
If this is your first house flip, you may have dreams of making double what you paid in half the time, but it’s important to stay realistic. Draw up blueprints, renovation and repair estimates (then add 20% because that’s the reality). You’ll also want to shop for discounted supplies and tools in advance, obtain any necessary permits, and be ready for any emergencies small and large. You know what they say: If you fail to plan, you plan to fail.
5. Start small
For your first home flip, try to look for a home that needs light renovations such as new windows, cabinets, lighting, flooring, painting and other such jobs. When you need to replace a retaining wall, put in all new electrical or install a bathroom where there wasn’t one, for example, you could be in over your head before you know it.
6. Don’t go it alone
As with any property purchase, you need to work with professionals who know the business. This includes your Realtor®, bookkeeper/accountant, real estate lawyer and of course, your contractor. Ask around and check references before you sign on with anyone, and of course, get everything in writing.
Flipping a house can be a very rewarding venture with the potential for a solid profit. Armed with the right information, the right property, a great team (and a bit of luck with interest rates and the current market), you can be well on your way to success! If you’re looking to buy or sell a home to flip in Collingwood, Wasaga Beach, the Blue Mountains, Meaford or the Georgian Triangle, call on the trusted experts at Clairwood Real Estate. Connect with us today at (705) 445-7085 and let’s get started.