Smart Home Flipping

Flipping houses can be really enjoyable and profitable, or it can bring a lot of stress and become an endless money pit. Fortunately, there’s a lot you can do to firmly tip the odds in your favor and control your destiny. Keep your eye on these factors to flip smarter and stay in the green

Timing

The smartest house flippers are those that best understand their timing. Timing is really everything in this business. It applies to the days it takes to turn around a home, when you launch marketing campaigns, list with a real estate agent or realtor. Where the best get the edge is knowing the optimal times to buy and sell them. This is definitely seasonal the market tends to slow down during the winter and holiday months but heats back up in the spring and summer in most marketplaces.

Know The Comparables

If you don’t know you’re home values and rents you are going to get crushed. You’ve got to know your as-is prices, what end buyers are going to expect in rehab quality and style, you’re after repair values (ARV), and how banks appraise property and review appraisals. Not only do you need to know how to select and read comps, but you’ve got to have access to the freshest and most accurate comparable data. If you don’t you are investing blindly, and that’s never smart.

Remember You Aren’t Going To Live There

One of the biggest pitfalls I see real estate investors fall into is making emotional decisions. This affects bidding prices, dealing with contractors, and profits. But it really shows up when it comes to choosing properties and the level to which house flippers renovate them. You can’t live in them all. You can make great money flipping pretty houses, but it is truly all about the numbers. If the numbers are better on ugly houses and low end rehabs, trust the numbers. Don’t let your emotions cause you to buy, over renovate a property, or list it at an insane price. Keep things in perspective don’t try to recreate the wheel. Remember people lie numbers don’t!

Watch Your R.O.I. On Expenses

Carrying on from the above it is crucial to watch your expenses every step of the way. And yes; improvements, repairs, and renovations are expenses too. Some items are optional. You’ve got to know the R.O.I. on each dollar you spend, and demand the maximum R.O.I. (return on investment). If a granite countertop and hardwood floors isn’t really going to add another dollar in appraised value compared to a recycled countertop, why on earth spend more? That is throwing money away. Every time you throw away a dollar on improvements you are taking away a dollar in your overall profit. You shouldn’t be too cheap, but you do need to be wise.

Check Your Demand

As billionaire real estate investor Sam Zell would say “it’s all about supply and demand.” It doesn’t matter how cheap and readily available the supply is if there is poor demand. The opposite can also be an issue. Don’t guess, don’t go based off the news media, don’t rely on real estate agents or sellers to tell you. Dig into the numbers for yourself, and test the market. Don’t just look at the amount of inventory for sale now, how much is coming to the market, and days on market, look at the factors which may be about to affect demand when you’ll be putting a property back up for sale. This includes access to loans, interest rates, affordability, confidence in the economy, real estate design trends, and more.

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”