So you are ready to dive in and do your first fix and flip. With a little understanding, you can make the most out of it, enjoy it, and in the end make some money. In this short article we will cover a few more things that you need to know and do for your first fix and flip property.
In our last article “Start With A Solid Foundation For House Flipping” we touched on a few things to getting started with your fix and flip business. Now we want to dive in a little more about how to know what you are getting into and how to best position yourself for success.
Repairs On Your “Fixer Upper”
The scope of work and who your end buyer is needs to be the very first thing you access.
Brandon Turner just posted an article on Bigger Pockets that gives some great advice on actually assessing your first flip:
2. Tour the property in detail.
Next, with a good understanding of how you want the finished product to look, walk through the property very slowly. Take a lot of photos or record a video, such as with your cell phone, so you can easily recall the condition later (trust me, you won’t remember it all). Furthermore, photos will help you sell the property later to the cash buyer. If the seller is home, be sure to let them know you will be taking pictures, that they’re for analysis, and that you won’t be making the photos public. Don’t make them feel like you are invading their privacy.
3. Write down the problems in each part of the property.
While you are still on-site at the property, go room by room and write down its condition, as well as any needed repairs that you notice. For example, if you walk into the living room and see carpet that looks and smells like dog urine, write down “replace carpet in living room.” Also, write down a quick estimate of the size of the room (it doesn’t need to be exact; just make your best guess). Be sure to take a look at the exterior of the home as well and pay attention to any big issues, such as the condition of the roof, siding, and any outbuildings.
Read The Full Article “The Simple 6-Step Process for Estimating Rehab Costs“
Good info from Brandon, and we like his 4th step of estimating by condensing the list into one of 25 categories. We can’t stress enough how important it is to take your time when performing a walk through of the house for the first time. Even for properties that we are keeping for ourselves we always take lots of pictures, many times 50 or more.
Flipping Your Investment Property
After you have your scope of work down, next you need to look at your end buyer and other properties in the neighborhood. If all the properties nearby are selling at 100k to 200k, more than likely your end buyer is working middle class. No need to ad in extra expense by making the property look like the Taj Mahal!
Epic Real Estate posted an article that will probably help you stand back and evaluate your end buyer a little better:
#2: Know Your Customer & What They Want
The only way to get what you want is to give enough people what they want.
After calculating equity, you should have a good idea as to who you customer will be. For example, if you need fast money and you’re willing to sacrifice some of your equity to get it, your customer will probably be another investor – likely, a cash-buying investor – for the fastest close. In most circles, this is referred to as wholesaling.
On the other end of the spectrum, after fixing up the entire property and maybe even adding square footage, your customer will most likely be a resident owner – someone who will actually purchase the property to make it their home.
Again, these are the two extremes, and you could have anything in between – buy-and-hold investors, resident owners who want to fix up the property themselves, etc. The point is, there are different types of customers who want different things, and your job is to know who they are and what they want before you can effectively market to them.
Continue Reading “Flipping Houses Like a Badass“
While the two comparisons made in the article are very different, it should help you understand better how you need to assess the property for who your end buyer is.
We like to gain access to the MLS and look at current properties for sale, or if none are on the market nearby, look at pictures of properties that have recently sold. We pay the most attention to kitchens and bathrooms. If there are other properties on the market, we like to make ours better and competitively price the property so that it is the nicest property on the market at the best price.
Summing It Up
It can be an exciting time performing your first flip, but you need to be a little cautious and methodical when choosing what repairs to make. Look at nearby properties, either listed or recently sold on the MLS and get a good feel for who and what your end buyer will want in the property.
And as always, if you are looking wholesale properties for sale in Atlanta for your first fix and flip, visit our site. Until next time 🙂