There are many ways in which one can invest in real estate these days. Very few however, have gotten quite the press recently that flipping houses for profit as a real estate investment has received. With all the media attention we are seeing a growing number of would be real estate investors branch out into the world of flipping houses in hopes of quick and hefty profits.
With so many people getting into the game there are a few things you should keep in mind when it comes to flipping houses as a form of real estate investing that will keep you ahead of the curve. The most important thing to keep in mind however when making any sort of investment, real estate or otherwise is that there are no absolutes and there are no guarantees. Real estate has made and lost fortunes over the years and it is a fickle market. You need to be aware from the very beginning that if your plan is flipping houses for profit, you are taking a risk.
1) Have a plan. So many people go about this literally flying by the seats of their pants. Flipping houses is a serious investment and should be treated with the seriousness of the money that is on the line. You need to have a plan of action that is detailed, achievable, and well thought out.
2) Set daily goals. In most instances when flipping houses, there is a great deal of work that must be done in order to take a property from dud to diamond among real estate. For this reason you should set daily goals to keep you on target for completing your project one time. Every day that the house is not on the market is a day that you are definitely losing money in the investment. You need to make your daily goals aggressive but achievable and you need to hold yourself accountable when you find you are getting behind. In many cases it will cost less to hire someone to help get you back on track than you will lose by getting too far behind.
3) Know when to hire a pro. Check with local regulations and building codes to make sure that the work you are planning to do yourself doesn’t require a professional to either perform the work or an inspection on the work you’ve done yourself. Additionally, I have yet to meet anyone who is good at everything. It is better in some cases if you do not know what you are doing to pay to have a professional get it right the first time rather than waste time and money trying to muddle through yourself.
4) Stick to your budget. This is the one that most who are flipping houses for the first time fail to achieve. It is difficult to anticipate everything you will need during the process of your real estate investment. It is very important that you keep up with the bottom line each and every day in order to make sure you aren’t going far over budget and potentially placing your project in the red.
5) Don’t make it personal. This would be where far too many who are flipping houses end up going over budget. Do not get caught up creating a home where you would want to live. Create a home that will appeal to your target market and do not use upgrades that the market will not support. There is no point in putting top of the line stainless appliances and granite countertops in a home for a lower middle class family. You will not make enough return on the investment to make it worthwhile because the market can’t afford the upgrade.
While there are many details that go into a successful real estate investment, particularly one that involves flipping houses, the five steps mentioned above will give you a competitive edge. Flipping houses isn’t the only way in which to invest in real estate but it is one of the best ways to turn a hefty profit in a matter of months if you hit the right market at the right time.