Flipping a House: Buying
Flipping a house can be thought of as a difficult task. It can seem like any house has problems like faulty electrical or water damage, which deters people from fixing up a house to resell. However, we at Transforming Property Solutions have simplified the steps and debunked the myths of flipping a house, starting with how to buy a fixer-upper. Read more for some of our own tried-and-true tips!
The first step of flipping a house is deciding on your budget—and sticking with it. Your budget decides what properties you search for, but this can also be influenced by many other factors such as:
- Type of house: How much space do you want in the house? How many bedrooms and bathrooms?
- Quality of house: Are there minimal renovation or is it a major overhaul? Will you need to hire contractors?
- Location: Is it in the center of a populated city or farther away? What are the school ranked?
- How much time you want to spend on the project: The faster you complete the renovations, the faster you can sell the property. Be mindful of utilities, taxes, and insurance costs.
Don’t overwhelm yourself if you’re new to flipping houses! Start with just cosmetic updates for your first houses, like kitchen and bathroom updates, new flooring, new paint, new fixtures, etc.
Don’t start with a house with structural or mechanical problems. These pose a major risk to your budget and your timeline.
You can hire contractors, realtors, and help, BUT choose them wisely. Use their references and past clients to your advantage and ask around. To save time on haggling and getting bids approved, make a standard price list that breaks down the expenses.
When you pick a location you know well, you’ll be able to renovate easier with known contractors and also market your finished property better.
After you pick your budget, you can now search for houses to flip. This can mean:
working with a realtor to find on-market deals
working with wholesalers to find off-market deals
looking online yourself on sites such as Realtor.com, Zillow, and Trulia
The first goal is to find a good deal, where you’re buying below market value while having a wide enough margin to cover the expenses of closing costs and your renovations. You should first come up with the ARV, or the After Repair Value. This is the price the house can sell for after your renovations. After coming up with this value, subtract your renovation costs, closing costs, and other fees. Then, after subtracting your desired profit, you’ll come up with an offer price that works best with your budget and desired outcome.
When bidding, make sure to stand by your budget and your offer price. If the numbers don’t meet your minimum, keep looking. On the other hand, be open to compromise!
Flipping a house doesn’t have to be as hard as it seems. Be on the lookout for our blogs about renovating and selling a property! Transforming Property Solutions is located at 223 W 3rd St, Sanford, FL 32771. For more information, investors and realtors are encouraged to call 407-375-2317 or visit online at www.transformingpropertysolutions.com.