Wholesale Purchasing Tips
Renovating and flipping homes for resale or renting offers some of the best return on investment of any industry, but realizing optimal gains takes experience. To help new investors tackle their first off-market real estate project, we’ve put together our top tips for starters to give you the basics needed to turn your first project into a success story.
Always Work
Below Budget
Flipping houses means investing time and money into renovations and rehab. In order to keep profit margins at max, make sure your budget has room to handle the unexpected. You may run into structural problems once the walls are down or find that an entire HVAC system needs replacing, both of which can quickly push a tight budget over the edge. Ideally you’ll be completing the work with a hard money loan and every penny saved here helps pay the loan off to reduce the amount of interest you pay during the work.
Understand the Neighborhood
With real estate, you can have two identical houses selling for drastically different prices simply due to the neighborhood they’re in. It’s best to stick to neighborhoods with strong reputations or ones that are seeing a surge in popularity. While opportunities can be found anywhere, new investors are encouraged to play it safe and focus on learning the renovation process first adding on the challenge of a less appealing neighborhood.
Commit and
Move Swiftly
Even if you’re a Flip Bargains VIP member, the best deals don’t stay for long. Do your research ahead of time in order to make a decision on a property quickly, and with confidence. Once you’ve beat your competition to the punch, carry that mindset over to your contractors. Only commit a week or so to getting quotes as taking too long can snowball into further delays flipping the property.
Find Interested Parties Before Investing
This becomes easier over time as you grow your network of buyers, but starting your client list may seem impossible. In order to attract buyers, you need to flip the properties they’re invested in. Since you likely don’t have contacts to discuss the market with yet, take time exploring public forums and social media groups to see what homebuyers are searching for. As you deliver these properties, you’ll develop a buyer’s list to quickly sell off your latest flip.
Focus on the Right Renovations
Last but most certainly not least is taking time to review your planned renovations and how they create value. Don’t get attached to aspects of the renovation, focus on the numbers throughout. The goal is to create a safe and structurally sound home for someone to move into, all while staying under budget. Once you’ve accomplished that and still have some funds to spare, then you can explore adding high-end features that attract more buyers.
At the end of the day, the process of flipping a home is simple. Purchase a discounted property, hire contractors to complete the work and then sell it to the highest bidder! It’s the details of each step of the process that take your profit margins from comfortable to maximum.
