A lot of money has been made improving homes and selling them at a much higher price. You can’t just paint, carpet and plant some bushes and expect to make a 20% profit. Here are four things you should be ready for before “flipping’ a house.
1. Expert help. The assistance of an experienced, educated Realtor is a must so you can know what the market is doing. Ask about the price range that is selling in today’s market in your area, what type of home and area is experiencing the highest sales, what features help to sell a home quickly and what is the average time on the market between listing and selling a home.
2. You need a trusted handyman or contractor. Prior to purchasing a property, you’ll make a list of improvements that will enhance the value and “sellability” of the home. It is important to be able to rely on your handyman’s pricing as well as the quality of his workmanship.
3. Money. Be prepared for a 20% to 25% down payment and a higher interest rate on investment property compared to the home you purchased to live in. The cost of repairs most likely is commensurate with the price range of the home you are flipping. No matter how well you plan for improvements, there is typically a “surprise” you didn’t count on.
4. Don’t get in a hurry. When looking for the right property to purchase, take your time. Be sure it is the right one. Repairs and improvements also can take time. Remember “patience is a virtue”. Most lenders will require the seller of a home owns it for a minimum of 91 days prior to selling before they will loan money to a buyer.
Buying a home to “fix and flip” can be a good investment today. Buyers like to purchase homes that are move-in ready. Although the number of foreclosured homes for sale is down, there are always some good buys to be found. Ask your Realtor to put you on an “automatic” notification for these homes. Oh, and one more thing – as a fellow Realtor told me recently, “sexy kitchens sell houses.” Good luck on your flipping adventure!