Whether you have just started flipping homes or you are still trying to decide if you have the skills to get started as a home flipper, you might be wondering how to find a great deal. After all, you want to find a home that’s going to make you money in the end. Luckily, even as a new home flipper, finding a good deal is not too difficult if you focus on the right things.
Focus on the Neighborhood
One of the most important aspects of a great flip is the neighborhood. A neglected house in a nice neighborhood is going to be far more desirable than a similar house in a rundown community. A general rule is that you want to find the worst home in a great neighborhood rather than the best home in a bad one.
One indicator that it’s a desirable neighborhood is that homes in good condition sell quickly. The seller might also be able to charge more than it would cost for a similar home in another neighborhood. If your target buyer is likely to have children, you may also want to focus on homes in neighborhoods where the children will be attending good schools.
As a beginner, you want to limit your risks. This means seeing the home in person, including both the interior and exterior, before buying it. As you become more comfortable with the flipping process, you may want to buy a home through an auction. With a home bought at auction, you might not be able to see the inside of the home prior to buying it. Even then, you should at least drive by the home. See as much of it as possible, even if that means just the yard and the exterior. Get a feel for the neighborhood and do some research. Is this a place people would likely want to buy a home?
Focus on the Investment Required
Your investment is about more than just how much money it will cost to buy the home. Get a realistic feel for how much it will cost to repair the home. Give yourself a little cushion when it comes to your budget. There will likely be unexpected repairs, such as the bathroom pipes that are rusted or the backyard shed that needs to be torn down.
To decide if the financial investment is worth it, add the initial cost of the home with your anticipated repair costs. Find a few nearby homes for sale that are in good condition and that have similar floorplans to the home you are considering. After adding your likely costs, subtract them from your anticipated sale price based upon the similar properties. Then determine if the investment is still worth it.
Another investment to consider is your time. As a beginner, you will likely want to pick a flip that’s not too far from your own home. Not only will this give you more time to work on your flip, but it will also save you gas. Be aware of how long specific renovations will take to complete.
Focus on Your Resources
It is also important to consider your own resources. As a new flipper, you likely have not built relationships with electricians, builders, or other contractors quite yet. You, possibly with the help of your family and friends, will likely be doing a large percentage of the work. Consider your own abilities. If this is your first flip or even one of your first flips, you will likely want to go for a quick, easy flip. While you may not get as much of a return on your investment, you also will not have to worry as much about your flip becoming a flop. Even as a new flipper, though, you will likely need to seek at least some outside help, especially when dealing with electricity or other parts of your home where not using a professional could ultimately cost you extra money. Use this time to make connections that you can rely on for future flips.
For many people who flip homes, especially those who are new to the practice, money is one of the top challenges. Do not let money get in the way of your flipping dream. At Center Street Lending, we have experience lending money to home flippers. If you need a loan to get started flipping homes, contact us.