Many real estate investors make a living by flipping homes. However, unless you choose the property wisely, you may end up making losses.
How to start
The first step is to find a home that has some value. You also need to look at some core factors. Here is a quick overview of the features the house must have. Of course, you can overlook some of these features, if the price is right. However, such deals are hard to come by.
Don’t overpay
This is a costly mistake that people often commit when buying a house. If you feel that the owner of the home is asking for the moon, you should move on.
Avoid properties that require extensive repairs
What a house flipper basically does is to buy shabby looking old houses. They will then do the required repairs and transform these properties into something better. However, stay away from properties that have structural problems. Fixing a broken window or applying a fresh coat of paint is relatively easy. But major structural problems are totally different. They will require extensive repairs.
This might even involve rebuilding the property. Remember that an old-looking property with no major flaws is much more valuable than a good-looking property with major structural issues.
The neighborhood
The location has a direct impact on the sales price of a property. So, look for properties in established neighborhoods. They will have more takers.
If possible buy the worst house on the best block in the best neighborhood. You might be able to snatch them for a low price. However, remember that properties in good neighborhoods are more likely to face competition.
Neighborhood factors
Certain features near the home can have a direct impact on its value. For example, properties located near factories, power plants, airports or highly trafficked areas are less desirable and hence less valuable. On the other hand, properties overlooking a hill or facing a water body tend to command a price premium.
While buying a waterfront property may not always be possible, you should stay away from properties located in undesirable neighborhoods.
School district reputation
People who are more likely to buy flips are first time buyers. They may be young couples with small children. So the school district reputation is a crucial factor.
The school district can increase or decrease the value of the property, and hence this is not something you can overlook. If you find 2 houses in different neighborhoods for the exact same price, you should opt for the one that is located in the best school district.
Less competition
If you flip homes for a living, you should be able to find the best deals that other investors don’t know about. Use your own techniques to find out properties before others do. This may not be possible if you are just starting out. However, as you gain experience you will make valuable contacts.
If several investors bid for the same property, you may not be able to buy it. One way of changing this is to approach the owner directly. Many people are emotionally attached to their home. If you can convince them you will take good care of their property, they will gladly sell it to you.
