Flipping properties has never been more popular, and more and more people each year are looking into the relatively quick (and large) returns that this method of investment can provide. However, as with most things, there’s a little more to property flipping than first meets the eye. Here are a few obvious (and not so obvious) hints, tips, and tricks that you should take into account when thinking about flipping a property.
1.) Walk Before You Can Run
It can be tempting to go after a huge project when you first start flipping properties. The huge potential returns that are available on large renovations can be enough to entice even the most cautious of investors into a project that’s a little too big for a first-time flipper.
Start with a modest project first. By doing this you’ll be exposing yourself to less risk, and the entire process will be a much gentler learning experience (which will give you a solid knowledge base for a larger second or third project after the first one is completed)
2.) Remember Holding Costs
It’s all too easy for newcomers to the flipping business to overlook the potential chaos that can be caused when you don’t properly take holding costs into account. While the property is in the process of being flipped you’re going to be responsible for things like mortgage payments, HOA dues, insurance, and a wide range of other small costs that soon add up.
Prepare for the worst when you’re budgeting for your first flip. It’s always best to assume that things are going to take much longer than anticipated. Once you’re working with that assumption, you should then ensure that you’ve got enough capital that’ll provide you with sufficient runway to get the project completed (and a sale closed) before cash flow becomes an issue.
3.) Be Ready To Rock
Holding costs are the number one enemy of investors in the flipping business. Any delays, time wasting, or other hold ups are literally eating into your profit margins by the day. When you buy the property and the keys are exchanged you should be ready to start working immediately. This means your plan needs to be 100% complete, and your contractors should be scheduled to start work as early as possible.
4.) Consider Selling Under Market Value
This tip is a little more specific than the other tips on this page, and if you’re in a highly competitive market, it might not be valid advice. However, when flipping a property, the longer it’s on the market waiting for a buyer, the less profit you’re going to make (due to the holding costs we talked about above).
In certain situations, it can be a good idea to list your property around 2% lower than its appraised value to entice a quick sale and cut down on holding costs. However, you’ll need to know the local market well (or work with a specialist) to make this call successfully.
5.) Work With A Specialist
Following on nicely from the tip above, here at the Trisha Cook Team we’ve got several agents that specialize in assisting people who are looking to flip properties as quickly as possible (for the greatest amount of profit possible). There’s 1001 other hints, tricks, tips, and potential pitfalls similar to the ones we’ve talked about above that any investor who’s looking to flip properties in or around the Savannah area should take into account.
If this article has given you food for thought and you’re interested in potentially flipping a property – then why not contact our team to find out more information on how we can help make your next flip more profitable! 912.737.2935 or firstname.lastname@example.org