Whether you have outgrown your current residence, inherited a relative's home, or are even looking to start flipping houses as a career, there are a few tips and tricks to keep in mind when you’re wanting to turn a profit by flipping a home.
First things first - what is house flipping anyways? In short, when you flip a house, that means that you are looking to sell a home quickly and for a profit. The trick? You need to put in some good elbow grease in order to not only sell the home quickly, but to also ensure you have amplified the value of the home.
How do you do this? Check out these tips:
Determine your ARV and stick to your numbers
An ARV is your Average Repair Value and means everything when you are looking to flip a house. This means exactly what it sounds like - it’s what you are going to sell the house for after you have rehabbed it. The number you want to stick to when keeping this in mind? You never want to exceed 70% of your ARV. This means that in order to buy and rehab the house, you should never spend more than 70% of what you are going to be selling the house for.
Know your market
What’s the end goal of flipping a house? Making money, of course! Along with sticking to your numbers, you will never have a successful flip unless you understand the market and whether or not there is even a need for a house flip. Not only this, but determining the location, demographics, schools and everything in between will help you determine who you are going to market to and what your intended profit margin will be.
Rehab your house with potential buyers in mind
This is essential in ensuring a successful flip. Once you have determined the location you are rehabbing in and who is moving there, you can build to sell. Are families moving to your area? Will they need extra bathrooms? Is there a lot of acreage for farms and horse breeding? Would building a pool encourage or deter a seller? What type of kitchen is needed? Once you know who your future buyer will be, then you’ll be able to move forward with your rehab.
Make a list for the buyers
You put in a lot of work into rehabbing your home, so why not show it off? No matter how minimal the change, let the buyer know what you did. Sprinklers, HVAC, electrical, heck even if you changed the hot water heater - this will instill a sense of trust in the buyer that they are getting a top notch home that won’t bring any issues after purchase for years to come.
Price to sell!
Don’t be greedy in listing your home, because it just won’t sell. List your home with a fair market price with the intent to sell...especially if you are looking to sell the home quickly. The buyers are more than likely shopping around for their forever home and will be comparing prices. You want to ensure that you are priced competitively in order to sell in a timely manner.
Are you ready for your first flip? Call Mortgage Advisor to see how we can help!