There are so many house flipping reality shows depicting amazing before and after reveals. While most of these shows present some of the problems house flippers face, they really do not do justice in highlighting the real challenges and pitfalls all investors face. From borrowslabs blog, Julie Herasymenko, shares 5 Secrets of a Successful House Flipper.
Secret #1: Patience
The first and most important skill for a successful investor to have is prudence – BE CHOOSY! Many seemingly attractive deals come along, but one of the best rules of thumb is “When you’re unsure, it’s ALWAYS better to pass up a deal and risk missing out than get into something that’s going to flop.” Be aware of possible mistakes that can make your house flipping business a failure.
Secret #2: Due Diligence
Regardless of the helpful input on value, rehab cost and property details from the wholesaler, real estate agent, or property owner, you should always double-check all the numbers and information prior to closing deals. Run your own comparables, get contractor bids, do a home inspection, verify square footage and permits, understand the sell opportunities, etc., to flip a house. Once you’ve signed on the dotted line, the ultimate responsibility falls on you. If you go over budget because you relied on someone else’s assessment and failed to seek your own independent bid, that money is out of your pocket, no one else’s.
Secret #3: Move Quickly
Each day of delay cuts into the profits – and it can easily run-up to a few hundred or even thousands of dollars per day. To make things even more complicated, the timeline of many things is outside of your control. That said, there are certain things you CAN do to manage the timing of investments better.
- First, have all your ducks in a row before the closing (plans, contractors, permits, etc.). The minute the deal closes, you’re on the clock. Do your best to have everything arranged so you can start the flipping project as soon as you have the keys in hand.
- You should expect to oversee the house flipping project closely. Unless you have a GC (general contractor) you know and trust, don’t assume that you’ll hand it over to them and come back to a completed rehab. This can be very time-consuming, but any good rehabber knows you must supervise your contractors’ work. Things constantly come up, and there are always decisions to be made – you want to make sure you’re there when this happens. If possible, order your materials ahead of time: you don’t want them to show up late, especially now, during the COVID, with worldwide shipping delays and items on back-order.
- Unless you plan on doing a DIY, make sure to vet your GC. If you find a good one, keep them happy. Be fair, do your best to always pay on time, and it wouldn’t hurt to bring them lunch once in a while. It’s easy to forget the simple, little things when you’re in a mad dash to the finish line.
Secret #4: Build Your Network
Once you’ve assessed your own skills, think about what gaps you need to fill and start looking for people who can fit one or more of your gaps. Make sure everyone you work with is experienced and reputable in your market and remember “Cheaper is not always better.”
- Ask around for contractor references from real estate professionals, the local Home Depot or Lowes, other flippers. Find out about their rates and availability. When you’ve made a choice, make sure you pay them on time and maintain good working relationships with them for future flips.
- Without a good real estate agent onboard you may not only be missing out on great deals but also a good agent can help you in marketing and selling your property, which saves time and money.
- An inspector can help you size up your potential investment.
- Have a good lender that is able to approve your project quickly and offer insight and advice.
Secret #5: Love What You Do!
Despite what house flipping reality shows would have you believe, house flipping is not easy. It is extremely demanding, competitive, stressful, and requires patience to buy a house and make it work. In real estate investing, nothing ever goes according to plan. No matter how much you plan, there are always unpredictable variables – a pipe bursts; the permits take longer to approve, it rains while you’re painting the exterior, etc. The bottom line is, you have to want to learn about flipping houses all the time. If you don’t like this real estate investment business, you’ll be miserable.
Read the full article here.