Success Path: 6 Tips Every New House Flipper Needs to Know
Whether you’ve decided to take that first step into the world of real estate investing or you are still deciding if it’s something you really want to do, chances are you are already getting bombarded with advice and opinions from anyone and everyone. My advice: take these ideas with a grain of salt. While some of these people may have valuable thoughts, it can be seriously stressful to decide what’s actually important.
Tarek and I are often asked by overwhelmed students what they really need to know when they are first starting out. And while there are plenty of things I could cover with you, I’ve gathered these 6 tips that I feel are some of the most important for you to know at this point.
Make a Plan
Before you even begin looking at houses, you need to have a plan set in place. Decide what you want to get out of your business and how you are going to get to that point. Things to cover could include the kinds of houses you want to buy, what cash sources you need to find, how many houses you plan to flip in the next year (or the next month), how much time you can contribute to house flipping, etc. Take the time to investigate these things before you seriously delve into house flipping. And remember, while you don’t need to have everything set in stone right now, creating a basic plan to follow will give you some much-needed direction.
Find a Mentor
There is no better way to learn the ropes of real estate investing than working with someone who has “Been there. Done that.”. Find an experienced real estate investor who can offer you help and advice along the way. If you don’t necessarily know anyone personally, you can easily find the support and guidance of others on blogs, forums or workshops.
Organize a Team
Your team is going to be a valuable asset when you start flipping houses. I would recommend tracking down a real estate agent, lender, inspector and general contractor for you to work with. You can always add others along the way (i.e. plumbers or electricians), but I would certainly recommend starting out with these key people to build your basic flipping foundation.
Research the Property and the Market
Not every house is created equal. While one fixer-upper may be a goldmine, another may be a huge money pit. Before you make the decision to purchase a property, make sure you know everything about it. Work with your inspector and general contractor to determine what repairs need to be made and how expensive they will be. Take some time to research the local market, with the help of your real estate agent, to see if it is an area worth investing in or not.
When it comes to real estate, time is money. While I don’t recommend flying through the purchasing process, I do recommend not taking your sweet time on rehab work. Once the house is yours, you need to move quickly on repairs. The faster you are able to complete the renovation, the more profitable the flip will be as you won’t have to waste money on taxes, loan payments, etc.
This is Not Your House
While it’s easy to design for your own tastes, you need to keep your potential buyers in mind while you are remodeling your flip. While a red accent wall would work great in your own house, chances are your buyers aren’t going to love the same things that you do. Creating mass appeal, such as using neutral paint colors, is the most effective when you are flipping a house as you’re remodel will appeal to most people.
Over the years, I’ve found that house flipping can be a great source of income when you are willing to work hard and put in the effort. I highly recommend following these tips when you are starting out as they can be a great guide for your first flip.