You have probably watched countless shows on TV about flipping houses and making a large amount of money in a relatively short period of time. While this may not always happen, there is a good chance that if you do your homework properly you will make more money in a few months than what the average worker makes in the entire year!
So what steps should you take to ensure that you will not end up losing your shirt?
An important rule to follow is to buy the worst house in the best neighborhood. Do your research on the crime rates, schools and the community in general. You may get a great deal on a property but if it is located in a bad neighborhood it will not sell quickly or for what you had hoped.
Learn to shop wisely. Never go for the top of the line renovations and fixtures. The goal is to make the most money possible with the least amount of expenditure, so where you can save money by buying less expensive, do it.
Unless you have done a thorough inspection before buying, there may be unpleasant surprises – electrical, plumbing or structural, which may cost you more time and money. There is also the possibility that unanticipated problems may show up when the buyer’s inspector looks over the house. Again, you could be in for some huge cost overruns.
Budget properly before you buy. Do some thorough homework on the costs and “what-ifs”. What happens if the property takes longer to sell after you have renovated it? Do you have the holding power? Have you taken the potential higher property taxes into account? Have you budgeted for delays – contractor, materials, and permits?
Many people think that flipping a house means doing a bit of painting, a few small renovations, and some cute decorating. There is a lot more involved. If you are disciplined, work well with stress and have some cash to possibly lose, then you have a good chance of succeeding and your efforts will pay off handsomely!