You’re thinking about doing a few flips. Perhaps you’ve watched a couple of those awesome TV shows, have some skill and think it’s the way you want to go with real estate.
This is the one everybody talks about. You see the TV shows, they make it seem glamorous and exciting. It’s fast money. Easy money.
Everybody likes fast money, so folks (non-rebels) who’ve never done a flip before, go and buy any property that seems like a good deal. They convert what they see on TV into reality. They take their savings and buy a property from the auction, they put in granite, expensive appliances, and light fixtures. They paint it and at the end of it all, they sell for big money!
EXCEPT, It’s not really that way, is it?
Let’s get realistic. The shows leave out some really, really important stuff. They leave out the finding, funding, most of the fixing, and selling of the property so you can make that easy money. They only talk about made-for-tv-drama issues … that they can almost always solve within budget. They never talk about the property that doesn’t sell or appraise. They don’t talk about the cost of borrowing money or the neighborhood expectations, heck, they don’t even talk about the placement of the property in the neighborhood – which can change the sales value of the property dramatically.
And the #1 thing that is never mentioned: A flip is always a gamble…
But rebels know that the only way to control the gamble is to understand what you are getting into before investing your hard earned cash!
So, before you take your next step, do yourself a favor and keep in mind the following:
- Know the market where you’re doing the flip.
- Is it an up and coming area?
- Is the neighborhood mostly rentals?
- How long are homes on the market before getting an offer?
- Do your homework. Just because the seller says it’s a great deal doesn’t make it so. If you are using to an agent or buyer to find your properties, make sure they have the experience and knowledge of flips (hopefully they have done them) and the understand everything on this list.
- Know the neighborhood values.
- What is acceptable in this neighborhood?
- After purchase, repairs and improvements will you see a healthy return?
- Know the costs of repairs and renovations.
- Work with experts.
- Know your numbers before the purchase.
- Allow for the unknowns.
- Know what will add value.
- Don’t make the mistake of putting in a new bathroom for $10K and only adding $7K in value to the property.
- Not all flips need granite countertops.
- Don’t get trapped by the interior walls. Think outside the walls.
A flip is not something that should be undertaken lightly. There are a lot of moving parts and as you know time is of the essence. You will find that when it comes to flips, you will need to roll up your sleeves and tackle: plumbing, electrical, roofing, drywall, flooring, cabinets, heating, cooling, bathrooms, kitchens, countertops, etc. Personally, Rebels tend to learn enough of everything so that you can develop an accurate B.S. meter, and understand the costs involved.
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