Buying and renovating older homes or flipping houses in need of repair can be a very lucrative real estate investment venture, but only if you treat it like a business and make sure you plan ahead with profits in mind. There may always be unexpected issues or expenses that come up during a flipper project, but if you prepare then you’ll be able to secure your investment more confidently by controlling all the things you can expect.
Planning a flip can be broken down into 3 main phases: before, during, and after. You can use these helpful checklists we’ve put together to help you plan out each important phase of your flip to reduce issues and improve your profit margins.
Flip Planning Checklist: Before
Before you flip a property, you must first find one that offers you the most potential for your budget and capabilities.
- Research the market and identify areas and neighborhoods with good market potential. (Good movement of homes selling, amenities, neighborhood perks, etc). Then look for the worst house in the best area or neighborhood.
- Know the competitive price ranges in the area where you’re looking at houses to flip. You’ll be able to spot deals quickly and know the potential if you have an idea of the typical home value in an area.
- Create a budget for repairs and renovations, compared with comparable pricing in the area to make sure that you stay profitable in your flip.
- Make a business plan that clearly outlines your goals, budget, expenses, and timeline to keep you on track during the flip. Include any permits you’ll need and make sure to get those all sorted well in advance.
- Secure any financing you need ahead of time. Plan for the purchase price of the home as well as your renovation budget.
- Be prepared to negotiate to keep your costs down. You don’t want to pay too much for a flip and risk losing money.
- Conduct a thorough inspection so you know about everything you’ll need to upgrade, repair, or renovate in your flip.
Flip Planning Checklist: During
During a home renovation, you’ll have to carefully coordinate projects and materials and ensure that deadlines between contractors’ work and your timeline stays on track during your flip. While you can’t always plan for every particular in a flip, being prepared will help you stay on track and ensure you have the home ready to sell on time. If you miss a key real estate window, you could be hanging onto the house and carrying the debt longer than necessary or be forced to sell it at a loss. In short, timing is everything in a flip, and this checklist will help you stay on track.
- Get all your permits in order and in place before you do any work. If you are adding living space, making improvements to the foundation, updating plumbing, re-doing the roof, or making any other structural improvements, you’ll need permits from the city. Research this in advance, coordinate with your contractors, and make sure you have everything in order for the work you’ve planned.
- Keep in communication with your contractors and material suppliers so you can carefully coordinate between the two. You’ll need to make sure that materials are on-site prior to scheduled work to prevent delays or lose valuable time in your flip.
- Keep your spending in check and consult your budget often. Things may come up that you could not have anticipated, so you’ll need to be able to make decisions and adjust along the way to stay on-time and on-budget.
Flip Planning Checklist: After
Once your renovations and repairs are all complete, you’ll be ready to list and sell your property. Here’s your final checklist for selling your renovated property:
- Reanalyze the market, looking at recent sales in the area with similar size, amenities, and upgrades.
- Price your home competitively and list it on the market to set up showings. Working with a professional realtor can be advantageous as they will take care of all the details, photos, listing data, and will market the property and handle showings and offers for you.
- Have the home cleaned thoroughly to remove dust from the renovation and make all the surfaces sparkle (don’t forget to clean air vents and piping as well).
- Stage the home professionally to make the most use of your renovated space and upgrades.
First Bridge Lending is very familiar with the flip real estate investment market. We’re local to California so we know the market trends impacting the market where you’re looking to flip a home. We can advise you on the fix and flip market and property specifics, and even go to site visits since we’re local to the area.
For more information on flipping homes as a real estate venture, contact First Bridge Lending directly by calling 415-366-1215.