House flipping is a widely used real estate investing strategy. It is featured in various real estate television shows. Such programs showcase the glamorous photos of investors buying and fixing homes. In reality, house flipping is a tedious process. Most of the time, it is easier said than done. You have to do it correctly or else you will end up not having profit at all.
Maximize Profit for Flipping Houses with the Following Tips:
• Budget – It is a must to have a solid budget. When setting a budget, you have to consider the price of the property, renovation cost, and carrying cost which consists of insurance fee, property taxes, interest, and the likes. You also need to add a contingency fund, which is around 10% of therenovation cost.
House Flipping Spreadsheet Video
This website has information about a fantastic house flipping tool. It is a spreadsheet that calculates costs and helps with your profitability.
• Location – it is important to carefully understand the location and the market as a whole. Is the property located in an area where there are upcoming business developments like schools, malls, markets, and hospitals? Is the location appealing to your target market? Always consider your market when choosing a property.
• Do not go over your budget when doing the renovation – one of the common mistakes of house flippers is going over their budget because of over renovation. You don’t necessarily need to over-renovate because your goal as a flipper is to deliver a sound property. Make sure you use your budget wisely. Focus on what needs to be repaired and improved. Do not let your personal likings over the property rule over. Consider the preference of your target market and focus on areas that can significantly increase the value of the property.
• Price accordingly – aside from going over the renovation budget in your fix and flip strategy, there is also a tendency to overprice the property. There are various reasons why investors come up with a very high selling price. It could be because of the effort they put in rehabilitating the house. It could also be due to renovation expenses and the time needed to get the job done. While you are in the business to make money, you should never forget the basic principle of being fair in pricing a real estate property.
Make sure you come up with a reasonable price. If the selling price is way higher than the average prices of house in the neighborhood, then the property could end up sitting in the market for a long period of time. House flipping is highly profitable as long as you factor in all important things and make sure you do it correctly.