Buying a full constructed house can be fairly simple, ably assisted by a team of realtors, accountants and lawyers. But investing in a house that is a fixer-upper can be quite tricky. While home and garden channels make it look as easy as pie, this process is very intricate. If done just right, it can yield great results in addition to being personally gratifying for you.
There is no reason to fret though, as Jeff Adams, the man behind many house flipping projects himself, shares a few tips with you.
1. Budget Well
Jeff Adams advises you to add 20 percent to your estimate of your final cost as budgets often overshoot. The perils of underestimating could leave you with a hefty bill pushing you in debt. The first step is to locate a piece of property that is cheap yet not so run down that it requires a great degree of investment of time and money. Once the property is procured, make a list of all technical work that needs to be done, factoring in how much an independent contractor would charge to get the job done.
When the market was hot, it was relatively easy to get mortgages for the investment market but the current situation, cash is the only way to get work done. Ensure your financials are sorted before deciding to flip a house.
2. Selecting What Type of House to Flip
This step is just as important as getting your finances in order. Going in, would you rather flip houses that are available on foreclosure or new houses? You also have to factor in how much you are willing to spend on these houses. Go check the area the house is in as well as the house itself physically. Do not believe any websites or the words of agents as the pictures may be deceptive.
3. Examine Key areas
As the saying goes – presentation is everything! Jeff Adams observes that a swanky kitchen, complete with china and well done bathrooms are important aspects to consider. Also, make sure the pest issues such as termites; rodents, etc are under control because if not, it is grounds for a potential lawsuit. To add a little curb side zing, you may also have to invest in landscaping and fixing the fences. Though all of this may set you back quite a bit, the more the investment you make, greater the returns.
4. Set a Price
If you are a newbie to flipping houses, this part is tricky. If you value your house too high, it may make people wary, but pricing it too low means you will lose a great deal of money. Hire an appraiser to determine how much your property is worth and ask your realtor for a realistic selling price.
5. Be patient
You may have done everything right but sometimes the odds may not be in your favor. Sometimes, the crime rate in the neighborhood or the lack of schools may deter potential buyers. The trick is not to lose patience; your investments will always reap results.
Jeff Adams urges you to remember the golden rule – ‘Buy Low, Sell High’ and use it as a thumb rule for all flipping projects. It is easy to feel overwhelmed while you undertake such mammoth projects, so just make sure you do not forget that help is always at hand.
