Can house flipping be a worthy investment that doesn’t hold unnecessary risk? Side hustles, such as house flipping, were once just a great way to get ahead of life’s curve, but, in today’s economy, side hustles are often necessary just to make ends meet. Whether it’s an income supplement or as a path to becoming an entrepreneur, few side hustles offer the versatility, financial rewards, and opportunities as house flipping. How risky is it, though?
Many house flippers easily double their investment funds upon sale, but that doesn’t mean that there isn’t risk. So, the biggest question potential house flippers have is in how they can ensure their efforts generate profit with minimal risk. It’s possible, but flippers need to be on top of their game.
Let’s look at the first segment of my 2-part series on tips to help ensure house flipping is profitable and as least risky as possible.
Tip 1: Scout Potential Flips That Have Motivated Sellers
Buyers are more likely to get a better deal the more motivated a seller is to sell. Motivation is unique. Some sellers are motivated by move and work deadlines or because they’ve already found a new home and are paying two mortgages. Get to know the seller as well as possible, looking for motivational factors that can affect pricing such as:
• Recent additions to their family causing them to have outgrown their home..
• Moving out of state or a good distance away.
• Home is in foreclosure or short sale.
• Owners are divorcing.
• Home is in great disrepair.
Tip 2: Utilize Professional Help Where And When It’s Best
Flippers often make the novice mistake of trying to do all the renovations on a flip themselves, and it can result in lost time and money. Doing minor repairs and upgrades is fine, and those having a trade skill, such as carpentry, can be a flip budget’s best friend.
However, flippers lacking such professional skills should contract out any work they’re not well versed in doing. This includes:
• Roofing
• Plumbing
• Electrical
• Carpentry
• Demo and additions
• HVAC
Otherwise, a lot of redos and subpar work will ultimately destroy a flip budget, passing inspections, deadlines, sale, and the flipper’s reputation.
Tip 3: Learn That Location Takes Priority.
Too many house flippers see price as the bottom line. Good deals are hard to pass up, but a far more important element is in looking at the area of the property, not just it’s price tag.
It doesn’t matter how fabulous a renovation is if it’s in an undesirable location. Flippers will more likely have a harder time reselling a decent house in a bad area than an eyesore in a great neighborhood.!
Experienced flippers will always look at both facets (price and location) before making an investment.
Tips For First-Time Home Flippers: Part 1
