This is the flipping a house checklist that will ensure you check every single box to maximize your profits. Between renovations to loans, here’s what to know.
Are you looking to get into the business of flipping houses? Flipping houses can be a very lucrative way to make money.
However, in order to make a profit, you need to know what you’re doing. If you’re new to the art of flipping houses or need some help honing your skills, then this guide is for you.
Read on to discover the ultimate flipping a house checklist to ensure that you make a profit.
What is House Flipping?
Before we dive into the house flipping checklist, we first need to answer the question, “What is house flipping?”
House flipping involves buying houses, fixing them up (sometimes), and then selling them for a profit. In order for it to be considered a flip, it needs to be bought and sold within a short period of time.
The time between the purchase and the sale is typically anywhere from a couple of months to a year. There are two types of ways to flip houses.
The first way involves buying a property, making the right repairs and updates, and then selling for a higher price then you purchased it. The second way involves buying a property in an area where home values are increasing rapidly. The investor then waits several months, without making any updates, to sell the property.
Flipping a House Checklist
Now that you know what house flipping is, let’s talk about what you need to do in order to make a profit:
1. Flip With Cash
While flipping houses can be very lucrative, it can also be very risky. Adding credit card debt to the mix only makes things more dangerous.
This is why we suggest flipping your home using cash. When you flip wit cash, you don’t have to worry about paying off interest fees. If you’re stuck paying interest each month, then that only increases the amount you need to sell the house for in order to make a profit.
Additionally, if you’re using debt to finance your flip homes, then there’s a higher chance that you’ll act out of desperation to make a sale. Cash-only flippers are typically more comfortable waiting out a slow market because they don’t have interest payments piling up.
2. Know the Market
In order to be a successful house flipper, it’s also very important that you know your market.
If you don’t have an understanding of the market in your area, then you won’t know whether or not you’re actually getting a good deal on the house you’re buying. You need to make sure the sale price is low enough so that even with renovations, you’ll make a profit when you resell it.
Additionally, knowing the market will help you choose a price point when it comes time to resell.
In order to get a better understanding of the market, we suggest hiring a real estate agent who has experience in the area. Your agent can help you target your search for a home for neighborhoods that fit your price point, renovation budget, and ideal profit margin.
3. Set a Budget for Flipping Your House
Just like so many other things in life, it can be easy to get carried away when renovating the house and spend way more money than you intended.
To make sure that this doesn’t happen, we suggest setting a budget for your house flip early on.
Your budget should include the initial price you’re willing to pay for the home, how much you’re willing to spend on renovations, and how much you’re willing to pay in selling costs.
Once you have your eye on a home to flip, make a list of all of the renovations that need to be done as well as estimated price points for each renovation. Also, don’t forget to hire a professional home inspector so you don’t miss any problems during the renovation phase.
4. Renovate the Right Way
Flipping a home doesn’t mean turning an unlivable shack into a luxury mansion. The key to successful home flipping is to choose a home that comes with manageable repairs that once made, will flip you a profit.
It’s important to remember that renovating big areas- like bathrooms and kitchens- can easily make or break your renovation budget. This is why it’s very important to be smart about your renovation decisions.
For example, instead of spending thousands of dollars on new custom cabinets, you could refinish the existing cabinets for a fraction of the price.
5. Know How to Spot a Good Flip
We’ve touched on this a bit already throughout the article, but in order to be a successful home flipper, you need to choose a home that makes a good flip. Here are some factors that you need to consider:
Just as location matters when you’re buying a home for yourself, so too does it matter when you’re buying a home to flip.
When choosing a home to flip, you want to look for one that’s near nice restaurants, good schools, shopping venues, and other desirable attractions. You also want to make sure you choose a home that’s in a safe neighborhood.
When shopping for a house to flip, you also want to pay attention to the surrounding houses.
If the house you’re considering flipping is surrounded by a bunch of eyesores, then it’s going to be much harder to sell. Ideally, you want to find an attractive home that’s in an attractive neighborhood.
The Floor Plan
It’s also very important that you take a look at the home’s floor plan before buying. A good floor plan is one that easily flows from room to room.
These days, a lot of people prefer open floor plans in which the kitchen is open to the living room and formal rooms (like the dining room) are smaller. In these homes, the master bedroom and other bedrooms are usually on opposite sides of the home.
Other features you want to look for in a home include large closets, a fireplace, a rear master bedroom, an indoor laundry area, and a finished basement.
The age of the home is another important factor to consider. For house flippers, it’s a big no-no to buy a home that’s built before 1978.
This is because homes built before this year may contain lead-based paint. If a home does contain lead-based paint, then this means you need to adhere to certain laws put forth by the Environmental Protection Agency when renovating the home.
While these laws are in place to keep buyers safe, as a house flipper, these laws can eat up your time and money. In the event there’s an audit, you’ll need to document every single renovation you make on the home.
Additionally, failure to abide by these laws can result in fines of thousands of dollars.
This is why we suggest avoiding this hassle altogether by sticking with homes that are built after 1978.
When choosing homes to flip, you also want to think about the potential buyers. Ideally, you want to choose a home that’s appealing to the largest number of buyers.
While buying an expensive beachfront home with an ultra-modern design may yield you a big profit once you flip it, this type of home can take you a lot longer to re-sell.
This is why we suggest looking for homes that a lot of people in the area can afford. You should also look for homes in popular neighborhoods that have an aesthetic that appeals to a lot of people.
Timing is Everything
When flipping a home, it’s very important to remember that time is money. Even if you’re not paying interest on the house you’re flipping, you still need to deal with carrying costs like homeowner’s insurance, maintenance, utilities, and insurance.
This means you’re losing money every day the home is on the market.
However, while you want to try to get the home off the market quickly when you resale, you also want to be careful about buying a home too quickly. Rushing out and buying the first home you see will often lead to disappointment.
As will hiring the first contractor who offers you a bid. When dealing with the initial purchase of the home, it’s important to take your time and get all of your ducks in a row. Then, once you’ve made the purchase, it’s time to hit the ground running so you can do a quick flip and resell.
Are You Ready to Start Flipping?
Now that you’ve read this flipping a house checklist, it’s time to start flipping homes! Before you know it, you’ll be flipping homes and flipping profits like crazy!
Also, be sure to check out this guide to discover the top landscaping projects you need for your flip and fix property.