The 5 Do's and Don'ts of House Flipping

When it comes to making money in the business of flipping houses and other real estate investments you will find all kinds of do’s and don’ts along the way. These are extremely useful regardless if this is your first house flip or you have been flipping houses for years.

1. DON’T neglect to check out the neighborhood before you buy it. Visit during weekdays, weeknights, weekend days and weekend nights to get an accurate feel for the neighborhood. This can tell you things you might not know from just one or two real estate agent walk-throughs. Such as, if you think you might need to invest in extra security during construction. You will also want to make sure that the property you are considering is a good fit for the neighborhood and the plan that you have in mind for the property will match with the other neighborhood residents to guarantee a quicker sale.

1. DO set your budget and stick to it! If you blow your budget and cannot recover the extra money you’ve spent in the selling price on the house, you will cut into your profits and could eliminate them. The goal of every flip is to get in and out quickly and spend as little money as possible to make as much money as possible.

1. DO set daily goals and hold yourself accountable. If you don’t reach your goals for the day it can set an entire project back by as much as a month (depending on the goals and what has to be rearranged) as a result. Stick to your timeline and your daily schedule to avoid potentially costly delays in time and money.

1. DON’T forget how important curb appeal is to buyers. So many investors will shoot themselves in the foot with this issue. A run-down exterior to typical homebuyers, however, means that the inside is the same. Worse, they believe that the property will be a huge money pit. If you spend all your money, time, and effort making improvements to only the interior, you will have little left to make the outside appealing to buyers.

1. DON’T spend money you don’t need to spend. While it would be great to put in granite countertops and gourmet kitchens into every home, it isn’t always practical. This is often money that will not be recovered, particularly in homes that are in marginal neighborhoods. If you want to get the most for your money, avoid costly expenses that aren’t exactly necessary for the successful completion of the flip. Resurface bathroom fixtures rather than replacing them (if possible) and use new cabinet doors or hardware rather than adding new cabinets all together to cut down on expenses. In other words, salvage what you can, fix what needs to be fixed, and add a few cosmetic touches before moving on.

The market for real estate can be tricky so being prudent is always the safest bet. Avoid risking too much time and money on a property that isn’t going to recover those added touches and expenses later on in profit. Instead, hold onto those ideas for higher-end flips once you have a few successful flips under your belt. This isn’t to say that sometimes an investment in something more high-end won’t pay off, but when you are just starting it’s better to scope out the neighborhood and do your homework. Work with a mentor, if possible, to manage your risk and increase your profit potential.

Overall, when it comes to flipping houses, make sure that you know the investment that you’re making. Ensure that you follow the schedule that you set out to have. Following these tips and tricks will help you stay on track and have a successful and profitable flip.