Dos and Donts of Property Flipping

HOUSE FLIPPING DO’S

Budget, Budget, Budget

I don’t know a single investor who
has ever come in under budget on a house flipping adventure. If you do then you
are certainly in the minority. Budgeting is an essential practice. You need to
have a target budget and then have approximately 5% of the home purchase price
in reserves for what I call “Budget Busters” for when you exceed your initial
budget. Budget busters are typically the things that you uncover when
renovating your flip that you – of course didn’t budget for. Budget busters are
things like having to replace the bathroom floor because it’s rotten underneath
that old tile before you can put down new flooring when you weren’t expecting
to replace it. Or when you come in the house after a torrential rain and find
that your roof leaked all over you’re newly hung drywall and it has to be
replaced. Budget busters will always be a part of house flipping so to become
successful at house flipping you must have a budget that includes budget
busters.

Buy the worst home in the best
neighborhood.

Everyone says that the most
important thing to remember in real estate is location, location, location.
This should always carry over to your flips. Never buy a home if it is in an
undesirable neighborhood just because it’s a good buy. You will never be able
to sell it. Scour that great neighborhoods in your town and wait for just the
right one to pop up!

Never – I repeat – Never invest
more than a property is worth.

This is simple. Don’t put marble
floors and granite countertops in a $40,000 home. You will not get the money
you spent back out. Get the point. On the flipside never go cheap on an
extravagant home. For example don’t put peel and stick linoleum or Formica
countertops in a $500,000 home. You will never be able to sell it. Buyers in
that price range are looking for the extra amenities.

One word – INTERNET!

The internet is home to all the
knowledge and power you need to become successful in your house flipping
adventures. Information like finding foreclosures, HUD listings, property
assessment data and real estate listings are plentiful on the internet.

Find a Buyer before you List with
a Realtor.

Ever heard of networking? You need
to let people know that you have a really good house that is going to be for
sale just pretty darn quick. And if you can get a potential buyer before you
list it with a Realtor then you have half of the battle done. I’m not saying
not to list you home with a Realtor; I’m just saying to try to find a buyer as
soon as possible. Even if I had someone that wanted to buy my current flip
before I was done with it I would still list it with a realtor. I would just
negotiate the commission. Because a Realtor is not just there to find a buyer
but to help you through the transaction and make sure everything goes smoothly.
Hire a good realtor!

This is of course not an entire
list of house flipping do’s but it is my best suggestions for becoming
successful at house flipping.

HOUSE FLIPPING DON’TS

Don’t quit your day job – yet!

My website is called Flipping for
a Living but that doesn’t mean that it is a golden opportunity for you to go
out and buy a crapper of a place, flip it, make loads of money and think that
there aren’t going to be some pitfalls somewhere along the way. Do it for a
while on the side and if and when you have tons of money in the bank for
reserves then consider Flipping for a Living.

Don’t put all your eggs in one
basket.

This coincides with don’t quit
your day job. Don’t put all of your investment trust and knowledge into house
flipping once you get to the point that you can actually flip for a living. I
believe that real estate is one of the best ways to make money but there are so
many facets to real estate, and house flipping is just one of them. Invest in other
types of real estate like commercial properties so that when flipping is slow
you will have your commercial properties making money for you. Or if you want
to own some apartments to rent out then do that. I personally don’t want the
headaches of having residential tenants but there are tons of people who make a
great living doing it.

This last don’t is an
absolute key to your flipping success:

Don’t over-redo your flipping
projects.

Be realistic about the potential gains
that are to be made concerning your flip. Like I said earlier don’t put marble
floors in a double wide and don’t put linoleum in a mansion.