So you want to flip houses? Here are five tips that might help…
1. The old adage is true- it’s all about location.
When looking for potential flip properties, stick to the areas you know and make sure you look for neighborhoods that help sell homes quickly. My partner and I stick to East Dallas because it’s a hot-spot for young families and homes rarely stay on the market longer than a week. It doesn’t matter how great your flip is if you can’t sell it.
2. Don’t be the most expensive home on the street.
In the real estate world, you determine a home’s value by comparable homes in the neighborhood. It’s real easy to get carried away with ideas of creating the biggest and best home on the block and the potential profit it could bring, but the reality is that the biggest and best homes are often the toughest to sell. To ensure a quick sell, make sure the value of your home aligns with comparable homes in your neighborhood.
3) It’s not personal.
One of the biggest mistakes you can make when flipping a home is designing your flip to your specific tastes. Keep it neutral! You want to appeal to the masses with your design choices. No crazy paint schemes or super modern architectural plans. Think about what most buyers in your area would like to see instead of incorporating specific niche design schemes that may only appeal to you.
4. Add 20% to the budget.
If you think you’ve calculated every cost down to the penny, you’re most likely off by 20%. Flips always come with hidden surprises and expenses. Don’t handicap your flip by not having enough money in the budget. You will undoubtedly be met with problems with your flip that will need to be remedied- black mold, foundation issues, dry rot, termites, the list goes on and on.
5. If possible, add square footage.
This is a trick that has served my partner and me well. We look for homes that we can add square footage to. In real estate, you always calculate a home’s value using the price per square foot metric.
For example, if a home is 2,000 square feet and homes sell for roughly $100 per square foot in that neighborhood, you should probably list your home for about $200,000. So what we’ve done is we have found homes that we can add a second floor to, thus almost doubling total square footage. So instead of flipping a 2,000 square foot home, we are now flipping a 3,800 square foot home and we can now list it for $380,000. Adding square footage will require the help of a general contractor but it’s worth doing if you can pull it off.