Cute headlines aside, “flipping” really is the rage right now all around Central Pennsylvania.
While the buying of neglected properties to upgrade and resell never really went out of style, the bottoming real estate market and glut of foreclosures led to a resurgence of interest in flipping homes.
Flipping a home is a pretty straightforward process at its core: buy low and sell high. The buying low part is usually the catch, and many hundreds of professional real estate investors continuously prowl the landscape and haunt county sheriff’s sales ready to snatch up the well-priced “bargains.” This makes getting started in flipping a bit harder but not impossible, with patience.
Here are my tips on becoming a profitable flipper:
1. Learn your markets. This is a huge piece of your success. Knowing what areas are on the rise and what neighborhoods are attractive to buyers is an important filter to your search for a good flip property. Research the HUD and foreclosure processes so you have an understanding of the investor opportunities and risks in them.
2. Find a strong investment real estate agent. Having a smart agent on your side is very important. That person will advise you on the nuances of negotiating the transactions and be a sounding board for you as you walk a property with fix-up plans in mind. Choose an agent with a track record of working investment property purchases and street smarts in your market areas.
3. Learn the “rehabbing” lingo and cost structure. Google the subject and watch videos on rehabbing, which is the process of fixing/upgrading/certifying a property for successful resale. There’s a whole other lingo to it, and you should be able understand costs to do the majors such as roofing, kitchens, HVAC and landscaping. If you’re hiring contractors, understand what it will cost you versus doing the work yourself.
4. Have initial capital in hand. Research a second mortgage or business loan to get yourself financed for the first deal or two. Once you sell at a profit, you’ll be able to start pouring money back into the successive projects.
5. Don’t be afraid to say “no.” There are going to be many, many opportunities to say “yes” to a property that isn’t quite what you wanted. Plan ahead to set fairly rigid guidelines for your project on what areas and price ranges you’ll entertain for an offer. Remember the old investor adage: “You make your money when you BUY the house”.
There are still lots of great flipping opportunities out there – get organized and go look at some houses!