• About
  • Mortgage Basics
  • $40K Challenge
  • Aunt Doris
  • Grandfather Says
  • Privacy
  • Archives

Len Penzo dot Com

The offbeat personal finance blog for responsible people.

How to Increase the Odds that Your First Property Flip Will Be a Success

By Sabado Domingo

Property can be a great investment long-term, and many people buy one or more investment homes over the years and hold onto them to build capital growth and income.

However, these days flipping houses is popular, too. This is where you buy a home with the intent to hold it only long enough to renovate it and then sell it again for a profit.

While there’s plenty of profits to be had in this strategy if you do it right, many things can go wrong, too. Here are some ways to increase the likelihood of a successful result when you flip your first place.

Set Yourself Up Financially First

It’s critical to get in a good financial position before you buy your first property to flip. Having a cash buffer available if you need it will help you cover any renovation or other blowouts and ensure you don’t have to sell the home before you’ve finished doing it up. You don’t know how long it will take to sell the property when you’re done, either, so cash reserves will help you handle holding costs as long as it takes.

Being as financially set as possible first will enable you to find a better mortgage option, too, so you pay lower rates and enjoy improved terms and conditions. Lenders are particularly tough on those getting a loan to buy and flip a house since this strategy is a higher risk than occupying premises yourself or renting them out to a long-term tenant.

As such, check your credit report before you start applying for loans and have any errors on your file, such as other people’s outstanding payments under your name, cleared up. Also, pay down as many debts as you can as soon as possible. It’s wise to look into potential banks and other financial institutions that view flipping more favorably and offer excellent rates and terms. For example, you can try searching online for “mortgage, Virginia Beach” or “home loan rates in Denver” or something similar to find potential lenders to contact.

Do Your Research

Don’t skimp on research when you plan to get into flipping. To maximize profits and reduce risks, learn as much as you can about market preferences in the area you want to buy in. Discover what homebuyers most value, such as bedroom numbers, extensive gardens, home offices and granny flats, single-story dwellings, pools, smart-home and other tech features, or other features.

Determine if the main buyers in the area are young families, couples, singles, retirees, or other buy types, and what kind of maintenance level they prefer in their homes. You also want to know if they pay more for luxury fittings and fixtures or whether more budget offerings will be the best value for money choices for you when renovating.

Attend open houses and auctions and read up on sale prices online to discover what properties are selling at what prices. Plus, it pays to get to know realtors who specialize in your location. Ask them about the market, trends, what’s worth investing in, and so on. Learning about pricing will help you better negotiate the purchase price and understand when to snap a good deal up.

Find a Reliable Team of Contractors

Unless you have a wide range of trades-based skills — and even then, you may not have all the time required — you’ll need to surround yourself with a helpful group of contractors to get the work done on the house you flip. These short-term projects are meant to be done in a “get in and get out” way, so the idea is to fix up properties as quickly as possible and put them back on the market again. Working with multiple contractors will help make this happen.

Create a schedule for all the work that has to be done and the order in which tasks need completing so you can better project manage things. Doing this planning will save you time and stress, not to mention money, as you don’t want tradespeople waiting around while someone else finishes their part of the work. You’ll likely want to have a team that includes a plumber, electrician, builder, carpenter, roofer, tiler, painter, and landscape gardener.

Set a Budget

Before you even begin looking at or making offers on properties, set a budget for the project. You need to know how much you can comfortably afford to purchase a home, plus how much you’ll set aside for the remodel work. Factor in extra fees like demolition and rubbish removal, shipping, insurance, and closing costs, too, when developing your budget.

Plus, always keep a buffer of at least 10 to 15 percent free to cover any potential unexpected costs along the way, as these arise for most flippers at some point.

Flipping is something you’ll get better at and learn more about as you go along. However, following a few good practices will always help you make the project more likely to be a success.

Photo Credit: stock photo

October 25, 2021

The Question of the Week:

Are cryptocurrencies a legitimate wealth preservation asset?

View Results

Loading ... Loading ...

Recent Posts

  • How to Implement Strategic Planning Processes
  • Is It Better to Borrow From Your 401k or Take an Early Withdrawal?
  • When It Doesn’t Pay to Buy Big-Ticket Items on Sale
  • Black Coffee: Digital Castles in the Air
  • How to Improve Your Sports Betting Success
  • Toyota Has Started Accepting Bitcoin for Payment
  • 100 Words On: Why You Need Emergency Savings AND a Rainy Day Fund
  • Why You Should Consider a 203k Mortgage When Buying a Fixer-Upper
  • 6 Ways to Avoid Becoming a Pickpocket Victim
  • What Beginners Should Think of Before Starting Forex Trading

Disclaimer

This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice. In fact, making investment decisions based on information published here, or any other website for that matter, is more than unwise; it is folly. This website accepts advertising in the form of monetary and other compensation; as such, topics of discussion are occasionally influenced by these advertisers. Sometimes, an article may also include affiliate links, meaning, at no additional cost to you, this blog earns a commission if you click through and make a purchase (for example, as an Amazon Associate I earn from qualifying purchases). Remember, you and you alone are responsible for the decisions you make in life, so please contact an independent financial professional for advice regarding your unique personal situation.

Sign up for the weekly Len Penzo dot Com newsletter
Len Penzo dot Com Delivered Weekly
Join more than 40,000 readers and fans who enjoy personal finance and macroeconomics with an offbeat twist!
Invalid email address
Thanks for subscribing!

Popular Now:

  1. 1. The 6 Most Valuable Grocery Store Products
  2. 2. Series I Savings Bonds Are Now Paying 9.62%; Here Are Their Pros & Cons
  3. 3. 25 Examples of Shrinkflation That No Longer Fool Consumers
  4. 4. 7 Big Reasons Why a Roth IRA Isn’t the Best Way to Save for Retirement
  5. 5. 3 Ways That Great Sleep Helps You Get Richer
  6. 6. What’s the Fastest Way to Pay Down Your Mortgage Early?
  7. 7. How to Save Money on Dental Care So You Won’t Go Broke at the Dentist
  8. 8. Historical Gold & Silver Benchmarks for Wages and Commodity Prices
  9. 9. Tip Inflation: We’ve Got Nobody to Blame But Ourselves
  10. 10. 4 Good Reasons Why Some Quarters Are Painted Red

All-Time Most Popular:

  1. 1. 19 Things Your Suburban Millionaire Neighbor Won’t Tell You
  2. 2. Dear Friend: Here Are 41 Reasons Why I’m NOT Lending You the Money
  3. 3. Why Your Expensive Luxury Car Doesn’t Impress Smart People
  4. 4. If You Can’t Live on $40,000 Annually It’s Your Own Fault
  5. 5. 21 Reasons Why Corner Lots Are for Suckers
  6. 6. 4 Smart Reasons Why College Isn’t for Everyone
  7. 7. 18 Fast Facts About Social Security Numbers
  8. 8. My Ketchup Taste Test: Upset! Guess Which Brand Topped Heinz
  9. 9. Why I Prefer a Spreadsheet to Track Expenses and Manage My Finances
  10. 10. Here’s a Simple Trick for Getting Credit Card Interest Charges Waived

Copyright © 2022 Len Penzo dot Com · All Rights Reserved · Designed by Nuts and Bolts Media

© Len Penzo dot Com 2008–2022