Property has always been seen as an investment. It’s a way to pad your financial portfolio and hopefully pay off in the end as the value of the property increases. And where it used to be that most people would invest in property they could rent out, looking at it as a long-term investment rather than a short-term profit turnaround, today house flipping has become all the rage. House flipping gives people a way to purchase a property for a relatively good deal, put some sweat equity into it, and then sell it at a profit.
If you’ve been thinking about investing in your first flip but you want to be sure you’ve thought of all the basics and important steps, then you’ll want to read on.
Flipping vs Renting
The first thing to look into is flipping vs renting to ensure you’re making the best move for your finances. As mentioned, flipping is about providing that quick turnaround profit, whereas renting will have you in it for the long-haul, as you may end up holding on to that property until it is fully paid off. While you can make a big profit at the end of the rental lifespan, the fact is that you need to deal with all the hassles of being a landlord in the interim.
You may want to have a read of this guide from Robert Jenny Design, as it takes an in-depth look at the pros and cons of both flipping and renting. They have years of experience in flipping houses, so you know their tips are reliable every time.
Have a Clear and Strict Budget
As a first time flipper, there will be a lot of unknowns and variables you don’t count on, which can really hurt the budget. The last thing you want is for that budget to balloon out of control, as that will chip away at your profit. In fact, if you’re not careful, the flip may cost you money in the end rather than make a profit.
This is why it’s very important to set a clear, strict, and realistic budget from the get-go.
Research the Neighborhood and Market
Before you go ahead and make a purchase, you will also want to do some research on the neighborhoods you are interested in as well as the market. This will give you a realistic idea of what the top houses are going for and what the fair market value is for the area.
Beware of Costly Renovations
While flipping will require you to put some work into the house, there are some jobs you may want to steer clear of as a beginner. Any time you run into a house that has foundation issues, water damage, and leaking, and mold, then you are most likely looking at large and expensive repairs. These may be more than you want to tackle as a first flip.
The Older the Home, the More Surprises You’ll Find
The final tip is more of an expectation. Typically, the older the home you purchase, the more surprises you are in for. These “surprises” can mean big bucks and a big dent in your budget.
By keeping each of these tips in mind, you’ll be able to navigate your first flip much smoother.
