Everyone’s heard the old adage; it’s all about location, location, location. This couldn’t be true, than in the real estate business. What I learned from my real estate coach early on is it’s not always about a good deal, it’s about high demand. This can have the best deal in the world and the numbers could be outstanding but if you buy in a area that isn’t sought out after by most buyers then it could take you a while to sell. Trust me, I know. I have bought a few deals in the past that were 40-60 cents on the dollar but were in areas that have higher crime rates, low income housing and found myself having a harder time to sell. So I can’t stress this enough that make sure you take location into consideration when buying and choosing properties. Not to say that property wouldn’t sell, but it might take longer than if it wasn’t in that particular area, so why take a chance.
- Know the Renovation Costs
Once you have found the right property for you it is time to investigate the renovation costs. This is probably one of the most important areas of flipping houses. Knowing the renovation costs will determine how long it will take to fix up the property and what it’s going to cost you. If you aren’t a “handy man” and know what big and small renovations cost, find someone who does and put them on your team. You don’t need to be an expert in this area, but, you do need to know someone who does. Losing money on a flip because you didn’t know how to property evaluate the repair and material costs of a property is no excuse. You need to educate yourself on the renovation process to have a basic understanding of the average prices of most renovations. When evaluating the costs, be realistic. If there needs to be a huge renovation (like foundation repair) and you don’t feel comfortable doing it, walk away. There will always be more deals to be found. You want to be able to have the peace of mind to sleep at night and not have your business keeping you up on a decision you made and regret.
- Run the Comparables
Realtors play a huge part in the flipping of houses. A good realtor will be able to let you know what your property could sell for on the market once fixed up. Also known as comparables (comps). Before you put in an offer on any house you need to know what recently sold houses in that area sold for. Based on these prices this will help you determine what you need to buy at. Once you have that number you will add up the renovation and carrying costs. If the numbers still show a profit then you might have a good deal.
- Your work doesn’t stop until it’s SOLD
Being a professional real estate investor you always have to be on top of your game. That means your business and everyone and everything to do with it. Real estate is a continual game of following up. That means with your partners, realtors, lenders, contractors and anyone else who has a direct impact on your flipping business. You have to make sure that this business runs as smooth as possible and to mitigate risk staying on top of your team along the way goes far. Letting your team know that the lines of communication are always open will make them feel they can always come to you if they have a problem or concern.
I hope you enjoyed reading today’s blog and found it beneficial. As always, like, comment and share. For more information about some of the real estate results programs we offer visit Millionaire Mastermind Alliance.
Manjit Rukhra, Your Results Coach to Real Estate and Entrepreneurship Excellence