Before you invest

We see on tv reality shows about flipping properties. The profits you can make, how successful it looks. You think to yourself…I can do this.

What do you need to know before you jump in?

Here are 5 things I suggest you think about before making that jump.

1. 1.  You make you money when you purchase the property not at the sell. Many folks buy the house with the intentions of making a lot of money at the end, however, they pay to high of a purchase price up front. Not only are you out the purchase price, you have to add to that the estimated renovations, interest, insurance & UNTIL you get really good on your estimating a cushion of $2-$3k, maybe more.
2. 2. Get an inspection. You can have an inspection done by any inspector of your choice. An inspector might charge you a few hundred bucks, but that is worth it when you consider you might end up having foundation work of several thousand dollars, wood rot, termites, even a roof issue.
3. 3. Don’t do the work yourself. Hire a contractor, sub the work out. If you are doing the work yourself, you might save yourself some money, however, you could be using that time working your next deal. Using sub-contractors, you pay for the work they perform, they carry insurance, license etc., in the long run, this could save you lots of money. Also, they will probably be able to get the work done in 3 – 4 weeks & it could take you several months.
4. 4. Place the property for sale a little lower than market value. This will attract buyers & could help you move the property fast. You don’t want to sit holding property long that will cost you money. The whole idea of this is to buy, fix & sell, move the inventory fast but have it done right.
5. 5. Don’t fall in love with the house. Think of this as inventory. You want to do a basic rehab so the house value goes up, you also want to invest money where you get money back out of it now….not in 3 years. In other words, do not convert the kitchen or master bath into your dream master bath or kitchen…keep it simple, clean & precise.