Fix and flip opportunities have become more popular, allowing individuals to spend less on real estate investments, fix the issues with the home and then sell it for a profit. However, flipping houses isn’t always as easy as it may seem, especially if you’re a fan of the house flipping reality shows. While it can be an excellent way to make money on real estate investments if you have the right experience, it’s also easy to lose money on the process, especially if the home ends up requiring more work than you initially calculated or it takes longer than expected. The good news is there are ways you can recover from an unprofitable flipping experience. The following tips will help you make better decisions the next time around.
Watch the Market
The real estate market is constantly changing, and it’s best to keep a close eye on these changes to ensure you make the wisest investments. Talking with local realtors about demand, pricing and other factors can help you better gauge the best options for your next flip. Also, pay attention to the time of year. Winter is a lower time for sales in general.
It’s easy to make a mistake and pay too much for a property, dooming your success from the start. For real estate investors who flip property, evaluate the after repair value of the home and work your way backwards. Deduct the amount you expect to pay on repairs and renovations to give you an idea of the highest amount you should pay for the home. Checking the MLS for comparable homes in your market area can help you get a clear picture of how much you can expect to sell the home for when you’re done fixing it up. Don’t hesitate to get multiple quotes.
Expect the Unexpected
It’s rare to complete a home renovation without a few unexpected surprises along the way. When you plan for these surprises, you will reduce those expenses that can make your flip unprofitable. In addition, only fix what’s necessary to turn a profit on the property. Repair anything that’s broken, update anything outdated and choose one or two elements to splurge on to make the property more attractive to buyers. Don’t focus on making the house perfect. Instead, do just enough to make the home appealing while turning a profit.
Work with a Reliable Contractor
One of the biggest problems house flippers experience is delays in the project due to the contractors they hire. Only work with reputable contractors who have a good track record for staying on schedule. Get referrals from trusted sources and others who work in the industry. If a contractor isn’t meeting your expectations, make a change early in the project, rather than giving multiple chances, only to find yourself scrambling to meet your deadlines.
Stage the Property
When you’re ready to sell, staging the property can be the best way to sell the home for a fair price as quickly as possible. While home buyers like to be able to visualize their own furniture in a space, that can be challenging if you’re showing off an empty property. The good news is you only need minimal furnishings to provide the desired effect. Even though staging isn’t necessarily a cheap option, it’s a necessary step to help potential buyers focus on what the home can provide them.
When you learn to accurately value a property and minimize your costs without sacrificing quality workmanship, you will soon find these real estate investments more profitable.