In the past few years, the housing market has seen a sharp increase in prices. This has given rise to the practice of what is known as ‘Flipping’. “Flipping” can be a VERY lucrative business, netting some people over $100,000 in profit for each house!
The way it is done, sounds simple enough. Find a house, buy it, renovate it and then resell it.
Like I told you… simple. Right?
Not in the least. The first challenge of flipping, is getting the financing to start your project. You have to be able to financially afford to pay the extra mortgage payments if the project takes longer than anticipated or the house doesn’t sell on schedule.
Make sure that you take everything into consideration when asking for your loan. The initial cost of the house, renovation costs (including extra set aside for the “uh-oh”s that can pop-up unexpectedly (which is bound to happen), extra mortgage payments - just in case, and of course, the final closing costs
My rule of thumb? Calculate your total costs, add 10% for extras then take that total and add another 10% for the “OH, SH*T” factor.
The next challenge is to find that flipping house (pun intended) that fits within your budget and the anticipated time frame from start to finish. Having a few realtors as friends wouldn’t hurt, either. Another source can be tax seizure auctions or sales.
The third challenge? Finding contractors who can do what they say, when they say they will do it. There are many unscrupulous companies out there who will take your money and leave you in the dust. Ask around and always, always, always get a minimum of 3 quotes from 3 different reputable companies.
An important point of note, and many people miss this one (which is why I include it as a challenge) is to remember that this is a business.
Personal likes and dislikes should never enter the picture as you are going to be selling this property, not living in it. Do not get attached.
Once you have these challanges conquered, then it’s time to start the REAL work.
I personally do not hire people to do some of the work such as painting and drywalling, two skills I have myself. I do hire people to do the framing and finished building, as those require a knowledge of the building code.
Having said that, It is so much more satisfying to tear down walls myself and then watch as my vision of what it should look like comes to fruition under the skilled hands of a professional. Or, maybe that’s just me.
I always start at the top of the house and work my way down, tearing out the wiring or plumbing only if needed. The reinstallation work I do leave to the licensed professionals. They know what they are doing and they usually do it right.
Don’t forget the grounds surrounding the house, either. The landscaping should be complementary. You don’t want to have spent thousands on renovation and have your lawn area look like it’s in the middle of a jungle.
Then again, you don’t want your outdoors nicely landscaped and have potential buyers falling through the floor because of rotted out beams. IE, don’t go all out on one part and forget about the other. To sell a home at top dollar, it is essential that everything fits together.
Once the hard work is done, it’s time to put the finishing touches on the house. Hopefully you have not gone over budget (or if you have, not too far over) so that you have the money to put into ‘Staging” the house.
This is the part where you decorate each room in the house to make it seem lived in for your potential buyers.
So, let’s go over the steps again:
1) Get financing
2) Find a house within your budget
3) Find reputable contractors
4) Get Permits
5) Start Renovating and Landscaping
6) Staging (VERY important)
At this time, you should call up a realtor and have them come and appraise your project. Listen to their suggestions and critiques. They have been doing this for a living and know what the market is looking for.
Once you’ve gotten your appraisal, it’s show time.
Are you ready?
Watch for the release of my new book - ‘Flipping for Dollars’.
Due out by the end of the year!
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Michelle A. Hoffmann is a Work at Home mother of 4, writer, website designer,internet marketer,ezine editor/publisher/owner as well as wife to Internet marketing consultant. You can visit her website at http://www.24karatmarketer.com
