House Flipping Dos & Don'ts

5 House Flipping Do's

While many people have very specific dreams of enjoying the bountiful profits that can be made from flipping houses very few people put too terribly much thought into the process or any formulas that might be pertinent to success when it comes to flipping houses as a real estate investment venture or for the sake of building a nice comfortable lifestyle or retirement. You will hear a lot about the things not to do when it comes to flipping houses but very few people take the time to mention the things you absolutely must do in order to successfully flip a house and thus begin your ride on the road to real estate investment riches.

1) Do put everything to pen and paper and plan it out carefully before you begin. If you are going to enter into this to make money you need to treat it like a business. This means you need to have a plan of action and make every effort to work towards carrying out that plan.

2) Do establish a budget for the entire project. You need to have a plan for how much money you are willing to invest in the property itself, how much for renovations, and how much money you need to make in order to be a worthy investment for your time and labor. A house flip is a lot of work in order to pull it off successfully. You want to have a good idea of how much homes in the neighborhood are worth, the value of your property as is and the estimated value of the property once improvements are made. In addition you should also have a pretty firm grasp of the costs involved in making the repairs in order to create a realistic budget for the entire project.

3) Do have an inspection. This is the single most important detail that can save you a great deal of time, money, and heartache when everything is said and done. Be prepared to walk away if the inspection determines that there is more work needing to be done than simple cosmetic repairs. You want to make changes that people can see because those are generally the changes that drive up the cost of the house. You want to avoid needing to make changes and improvements that aren't visible but are very necessary. If you need to invest a lot of money and labor into the house you need to seriously consider the realistic profit potential the property offers. If it isn't significant then you need to walk away before the property becomes a real estate investment money pit.

4) Do know the neighborhood and plan your flip according to the needs of the area rather than your personal tastes and needs in a home. This is another thing that many first time flippers forget. This is not a personal project it is a business project and you need to treat it as such. Keep costs down and feelings out.

5) Do remember that you are in the market to make money not waste money when it comes to establishing an asking price for the property. You've poured blood, sweat, and probably more than a few tears into your flip but you cannot set the value of the property by the effort you've placed into it. Have realistic expectations of how much you stand to earn from your efforts and how much you are willing to go down on the price in order to walk away with some profit in your pocket.

You should also take a moment to reflect upon the fact that many first time flippers actually lose money on their first flip. If you turn a profit at all, even a small profit you have learned many valuable lessons that you can carry with you into future flips and make more money. More importantly the lessons you learn from your first flip are lessons that money really cannot buy so it is worth a lower profit or even taking a slight hit if your experience makes you even more money in the future as you continue along your real estate investment path.

5 House Flipping Don'ts

When it comes to making money in the business of flipping houses and other real estate investments you will find all kinds of do's and don'ts along the way. The truth of the matter is that these are extremely useful whether this is your first house flip or you have been flipping houses for years. In fact you might just find that you can learn something new on occasion by reading lists such as this even if you've been flipping houses for years and have many successful flips under your belt.

1) Don't forget to check out the neighborhood before you buy. You will want to make sure that the property you are considering is a good fit for the neighborhood. You should also take the time to make sure that the plan you have in mind for the property will match well with the other neighborhood residents in order to guarantee a quicker sale.

2) Don't blow your budget without just cause. Your budget is what you used to determine whether or not the house would be a profitable venture. If you blow your budget and cannot recover the extra money you've spent in the selling price on the house you will have seriously cut into your profits if not eliminated them all together. The goal in property flipping is to get in and out quickly and spend as little money as possible in order to make as much money as possible.

3) Don't forget to set daily goals and hold yourself accountable to those goals. If you don't reach your goals for the day it can set the entire project back by as much as a month depending on the goals and what has to be rearranged as a result. Stick to your timeline and your daily schedule in order to avoid potentially costly delays in time and money.

4) Don't neglect the exterior. Curb appeal is what brings buyers into the property. If you spend all your money, time, and effort making improvements to the exterior of the home you will have little left to make the outside appealing to potential buyers. A home buyer is in the market for the entire package. A home that looks run down on the outside leaves the impression of being neglected on the inside and many potential buyers will never walk inside if the outside looks forlorn.

5) Don't spend money you don't need to spend. While it would be great to put in granite countertops and gourmet kitchens into every home it isn't always practical and this is often money that will not be recovered, particularly in homes that are in marginal neighborhoods. If you want to get the most for your money avoid costly expenses that aren't exactly necessary for the successful completion of the flip. Resurface bathroom fixtures rather than replacing them if possible and use new cabinet doors or hardware rather than adding new cabinets all together to cut down on expenses. In other words, salvage what you can, fix what needs to be fixed, and add a few cosmetic touches before moving on.

The market for real estate is a very fickle market. Avoid risking too much time and money on a property that isn't going to recover those added touches and expenses. Instead hold onto those ideas for higher end flips once you have a few successful flips under your belt.