Everyone, it seems, has wanted to flip a house at some point in their lives. Most talk about it, some do a little research, a few take courses on how to do it, but only one or two in a thousand will actually do it! It’s not rocket science so let’s put it in a nutshell.
First and foremost you need to find a property with enough equity to absorb the costs of buying, renovating, carrying and selling the home. I don’t mean to be cavalier about this step, but it’s not that hard to do if you understand what makes a good deal. Here’s the secret; look for motivated sellers and make offers! Who is a motivated seller? A bank, an estate, a homeowner who can’t afford to stay and doesn’t want a foreclosure on their credit report or a homeowner whose house is in need of repair. Of course there are more, but I think you get the idea. YOU MAKE YOUR MONEY ON THE PURCHASE – YOU REALIZE THE PROFIT WHEN YOU SELL.
Next, you need a contractor – could be you – that will not charge you retail and that you can trust. This sounds like a daunting task but there are ways to make your life easier. First, always use referrals. If you don’t know where to look, start at a lumber yard – not a big box store – and ask who they would recommend. Their reputation is on the line and they won’t risk that. Another key is to set the expectation early and upfront. Time frames, costs and frequent communication will keep you out of trouble. This is a process and you will have failures. Monitor the job personally, often and with solid metrics. At the earliest sign of trouble take action to stop the bleeding. Hopefully those will be minor adjustments, but don’t be afraid to cut your ties and find another contractor.
Be realistic about carrying costs. If your schedule looks like you can reach the other end in 4 months then plan on 12. If you under promise and over deliver, you will be a hero. The other way around and you will be the scourge of your stakeholders.
Sell it fast! Remember, hanging on to this property is costing you $100 or $150 per day and preventing you from doing your next one. When you evaluate the end sales price find the number that you can expect to move the property in under 30 days. Holding out for the last five grand could cost you tens of thousands of dollars in carrying and lost opportunity.
Don’t fall into analysis paralysis. Do your homework, but take the first opportunity that meets your criteria. If your numbers show you could make 30k and you end up with 10k you have conquered the beast! How many people go to college and expect to EARN money as part of the learning process?
In Saratoga County, Malta, Albany, Troy, Schenectady, Saratoga Springs and the entire Capital District Living Well Realty and Victory Funding are two companies that are on the cutting edge of helping investors flip homes. Call Tim today at 518-899-5000.
