If you’re considering making some extra money, or in some cases, a career, out of flipping a property; it can end up being a lucrative step into the real estate market. However, with so many potential issues, knowing what you’re getting yourself into before you spend any of your money, is crucially important.
There are an array of options in property for people with all budgets, but, the fundamentals remain the same for each investor. The following points are things to consider before you sign anything, and will help you understand what you’ll need to have planned, ahead of any work begins on the property.
Understanding The Market
The market is the most important thing to bear in mind when you decide to flip a particular property. Many people will say that you make your money when you buy the house, because if you overpay; no amount of cutting costs and DIY will get you your cashback, let alone make any profit from it.
Figure out when is the best time to buy, and, if it’s not right now; hold off and save your money until the time is right to strike. If you’ve bought wisely, controlled your construction costs well, and sell in time; there’s nothing stopping you from making a healthy and substantial profit.
Ensure that you do not overpay for building work and finishes either; it’s easy to be attached to a property and become sentimental about it, but, sadly, this is when many house flippers lose their profit, and quickly. You need to have a good eye to spot a diamond in the rough and have the means to purchase it at the right time.
If the market is on a downward spiral in a specific area, that you have your heart set on, then you have to be strict with yourself, cut all ties, and move on to a more promising area. Knowing and understanding the market well, will help you to foresee any upcoming changes in it; helping you to decide when is best to invest.
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Considering The Time
Once your property has been signed over to you; let the work begin. There’s no time to waste in the fast-moving world of real estate, so it’s important that you have prepared a detailed plan of action for any work that needs to be carried out.
You should be thinking of supplies and services before you’ve even got the keys in your hand; enquiring to the businesses you’d prefer to use about what their schedules are like in the upcoming months, is an excellent way to gauge the time the project will take.
Sorting everything out, from bin hire to investing in an architect for your project, should become your priority before any work is carried out.
Although you’ll be keen to begin the work as soon as possible; patience is also a valued attribute when it comes to house flipping. There’s a huge difference between planning a project with deadlines, and, making rushed decisions in order to get something finished.
If you’re unwilling to wait for reputable services and materials, which are within your budget, then you’re likely to make desperate and snap decisions, which will end up being costly mistakes and pushing you well over what you’d budgeted for.
Bear in mind that if a builder, electrician, or engineer is too busy to arrive at your door immediately, then they are likely to be highly skilled at their job, and will be worth waiting for.
Getting To Know The Location
If the area you’ve chosen to buy your property has very little going for it, then you might be able to have found a cheap deal on the house; but, reselling it will be a nightmare. You need to ensure the location is full of amenities and services that everybody hopes for when they’re moving house. Y
ou can change and upgrade a downtrodden property easily; however, unless you’re the mayor, upgrading a surrounding location is a near-impossible task. So, drive around the area at different times of the day, check out the local restaurants and transport services, and figure out if you’ll be buying into somewhere desirable.
Aside from taking care of the construction and appearance of the outside of the property and its front yard; it’s worth considering how the aesthetics of the street outside the door will appear to buyers.
People can be put off by issues on the public paths and roads, especially if it’s directly outside of a property they’d been considering. Looking into any proposed work, problems, and the future of the area, will help you to understand work that can and should be engineered in the municipal area.
By becoming clued-up and well-informed on the changes that should be, or are going to be, carried out in your chosen street, suburb, or town will help you make smarter choices when it comes to investing your money.
Attracting A Buyer
If you’ve made the decision and bought the house, chosen the best tradesmen for the job, and have an idea of when you’re going to complete the property; don’t forget to have your potential buyer in mind at every step of the way.
You should have been considering who you’re selling to before now, with the location and surrounding area; but, now you can continue to think about them as you get to work on the property.
Think about how important an open-plan layout would be to your buyer, or if you’re going to have separate kitchen and dining areas or not.
Many young families want to be able to keep an eye on the kids as they cook or are busy around the house, so loads of separate rooms will put them off. When planning the top floor, or bedrooms in the property; consider if you’re looking to sell to young couples, or established families with a few kids.
Newlyweds will want a decent sized master bedroom, with an extra room for a potential office space or nursery; whereas parents with three or more kids will want at least three bedrooms and potentially two bathrooms, to keep the whole family happy.
Lastly; however, attached you’ve grown of your project, don’t over-price it when you put it on the market because you will put off buyers straight away. Price your investment wisely, and you’ll have a queue of potential buyers wanting to check it out.