It seems like every channel on TV has some sort of flipping show now. Some are better than others, while some seem to be all about just making a TV show. Sorry Mr Investor, but if you bought a house and didn’t see the obvious major crack in the foundation that’s going to cost you thousands, quit your crying 🙁
If you are new to flipping investment properties for retail, it may make you wonder “can I do this?” The short answer is yes, I think that almost everyone that has a desire to flip houses and has a solid coach and plan can get started flipping properties. But what makes a successful flipper? In this short article we are going to cover a few things that will help you in making sure you are on the right path with your real estate investment business.
Planning For Your Flip Property
In our post “Should You Start With Fix And Flips Or Buy And Holds?” we stated that fix and flip is our recommended path for new investors because of the cash that can be generated quickly. Then using the excess cash earned from those properties to use for buy and holds. But how do you make ensure that your next or first fix and flip is profitable?
Teresa Mears wrote an article on US News that gives a few good tips on setting out on the right foot:
They hire good contractors. Finding a good, reliable contractor to work with you on flipping a house isn’t any easier than finding a contractor to renovate your kitchen. Start looking before you find the house. Ask for references, call those references and look at completed projects. “This is going to be the hardest part of the whole thing,” Jensen says. “I have found three in my whole flipping career who were amazing. I have hired a lot more contractors.”
They buy in the right neighborhoods. When you don’t have a lot of money, the tendency is to assume that an inexpensive house anywhere is a good option. It isn’t. You want a neighborhood that is safe, where values are rising and where people want to live. “Not every house makes a good flip,” Jensen says. “Just because the house is priced low doesn’t mean it’s a good value. You’re not going to be able to force those neighborhoods to be good.”
They do work themselves – when they can do it well. One way to avoid dealing with contractors is to do the repair work yourself. That can be a decent option if you’re good at home repairs. Calculate how quickly you can do the work yourself vs. how much you would have to pay someone else. Your time has value, too. But bad renovations turn off prospective buyers
Read Teresa’s Full Article “9 Secrets of Successful House Flippers“
First, hiring good contractors. This is a must. Talk to other investors and get recommendations from them. You have to remember that you CAN’T pay retail prices and make a decent profit. There are a lot of contractors out there, some good and some bad. Hopefully you investor friends will have some good contacts they are willing to share. Word of caution here though, even good contractors can go bad, so make sure you are comfortable with them before hiring them.
Next, we want to touch on buying in the right neighborhoods. Just like rentals, you want to make sure you are buying in the right part of town. No war zones, and stay away from busy streets. Check the local surroundings such as schools and shopping centers and super markets. If you can, talk to the neighbors and ask them what they think about the neighborhood before you buy.
DIY Some Of The Repairs Yourself?
The last thing, doing some of the work yourself. Paul Esajian just wrote an article that gives some advice on doing some repairs yourself:
By electrical, we don’t mean major rewire work that requires 16 months of electrician training. But knowing the ins and outs of some basic electrical will save you money over the course of a real estate rehab from having to hire an expensive electrician.
Simple things like installing a ceiling fan or refreshing that indoor lighting from 1976 is a great set of electrical jobs that you could do on your rehab. To learn how, head over to your local library or check out a couple of YouTube videos to get you up to speed.
- Identify wires: It’s a challenge to figure them out later. Google “electricians code” to find out the best way to label wires in your rehab.
- Always test wires before touching: Testers are cheap and easy to use, but they don’t do much good in your pocket. Be sure to use them any time you’re working with a wire.
- When in doubt, get a pro: If you’re not sure if you should handle a electrical job, best to hand it off to a professional.
Read Paul’s Full Article “3 DIY Skills Every Beginner Rehabber Should Master“
We like this tip from Paul. Being able to change or install a light fixture or ceiling fan is a great way to help save on your rehab costs. Sometimes we go through and do all of the light fixtures ourselves when rehabbing a property. Important note though, if you are not comfortable with wiring, leave it to a professional!
Paul also lists tiling. If you have never tiled before, you may not want to experiment on your fix and flip. Maybe experiment at your own house first, then if you feel comfortable, do it on your rehab.
Paul also lists painting. This one we tend not to do. Painting the entire interior of a home can be time consuming because it really needs to be done correctly. The last thing you want is a sloppy looking paint job with wall paint on the trim or vice versa when a potential buyer is looking at the property.
Important Point To Remember On DIY
There is one thing that we want to cover about doing repairs yourself on properties, and it applies to any business that you are involved in. You need to carefully consider the cost of you performing the repairs yourself. What do we mean by that? You need to ask yourself this, “how much will this cost an hour to have done vs how much am I worth an hour?” Should you really be doing jobs that cost only $10 an hour when you could be doing something else that can earn you $100 an hour?! We will touch more on this in another post.
Summing It Up
If you want a solid foundation before getting into house flipping, talk to some other local investors, see if they will give you recommendations on contractors. From time to time you may want to do some of the repairs yourself, when it makes sense and you have the knowledge and tools to do the job properly. And lastly, make sure you are buying in the right neighborhoods, go ahead and talk to the neighbors and listen to what they say about the neighborhood and shopping centers.
If you are in the market for discounted investment properties in Atlanta GA, make sure to check out our site! Until next time 🙂