5 Things To Know Before You Flip A Phoenix Property

1. Many real estate investors in Arizona understand money is made when they purchase a house, not when they sell it. A lot of people are mistaken when it comes to flipping houses. They think they will buy the house, make any necessary repairs, give the home a little uplift, and then turn around and sell it for a major profit. What they fail to realize is there are numerous fees tied to flipping a house, like title company fees as well as potential buyer contribution fees, both of which can eat away the profit. And unfortunately, these fees are large enough that they eat away the entire profit and cause the flipper to lose money.

This is why the purchase price of a home is far more important than the intended selling price. Amateurs in the real estate business in Phoenix and Scottsdale often fail to understand the complexities involved in flipping a home. Take for example the vacant property insurance that has to be paid while the home is sitting on the market unsold. When you combine this expense with the cost of renovations and other taxes, it makes it fairly difficult to make a profit.

2. There is also the aspect of getting an Arizona home inspection performed that real estate investors need to be aware of. And even though this inspection tends to cost several hundred dollars, in the long run, it tends to be worth the investment. Having this inspection conducted will reveal any hidden major aspects of the home that need to be repaired that were not initially seen during the first walk-through of the home. Things like an improperly installed HVAC system or rotting wood under carpeted floors are both major repairs that a home inspection can uncover. It’s also important to have an inspection performed because it’s during this period of time that the house is still under contract, and if preferred, the buyer can cancel the contract and choose not to purchase the home.

3. Many investors who purchase a Phoenix home think they can perform all of the remodeling themselves, thus allowing them to save money and walk away with a higher profit once they flip the home. What they don’t realize is there are numerous remodeling jobs that need to be performed by professional contractors, especially anything relating to plumbing and electrical. Also, when investors perform all of the remodeling themselves, this extends the total amount of time it takes to remodel the home, thus increasing the amount of time the home sits on the market. The longer it sits, the lower the profit. This is why most successful home flippers agree that it is best to have professional contractors perform most of the remodeling to ensure it is completed correctly the first time and in a reasonable amount of time.

4. If you have the intention of flipping a home in Arizona, your goal should be to remodel it as quickly as possible and sell it even quicker. This is a major reason why numerous seasoned investors will price a piece of property several percentage points lower than what the competition will. In doing this, it allows them to resell the property according to a much faster timeline and decrease the amount of money they spend on holding and financial expenses. Time and time again we see that selling a home faster at a lower price will turn into a higher profit than pricing it higher and having to wait for months on end for it to sell.

5. You should hire an experienced agent. You may think that purchasing a home, remodeling it, and listing as for sale by owner is the best route to take, but it most definitely is not. And even though you may be turned off by the fact that most Arizona realtors have a six percent commission they keep for themselves when listing a property, the advantages a realtor can bring to the table are typically well worth the commission they earn. If you take the route of listing the home through sites like Craigslist, Zillow, or ForSaleByOwner, you are probably going to have to wait for an extended amount of time before you find a potential buyer. And once you do find a potential buyer, you may discover the buyer has a realtor working for them. If this is the case, you may have to be out a three percent buyer’s realtor fee anyway. When you have a realtor in your corner, you are going to receive much better exposure, meaning the home is likely to sell much more quickly than if you try to sell it yourself, and even better, since you are likely to sell it much more quickly, you can list it at a higher price.

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