| The first two tips for flipping a house are not about | | | | making a bad impression. Avoid this by starting with |
| what to fix or change. They're about time and | | | | changes that are most important. Then if you run out |
| money. Specifically, they are about how time costs | | | | of money or time, you've already done the things |
| money, and about how to determine how much to | | | | that will make the home sell. |
| pay for your "flipper" in the first place. Read these | | | | 4. Figure The ROI Of Improvements |
| first two carefully then, to make sure that you do | | | | The ROI or return-on-investment for each possible |
| this right. | | | | improvement should determine what you do to the |
| 1. Know Your Numbers | | | | home. You'll be guessing at times, but the principle is |
| How much will the house sell for when it is ready? A | | | | that you do only those things which increase the |
| clear idea of the ARV (after repair value) is | | | | value of the home substantially more than what they |
| necessary to safely make an offer on a property. | | | | cost. Such high-ROI improvements vary by area and |
| Don't just guess that you'll sell the home for $20,000 | | | | by type of home, but they typically include painting, |
| more than what you put into it. You don't decide | | | | carpeting, landscaping, and finishing unfinished space. |
| what a home is worth - the market does, so get | | | | With a small house, you might get new flowers and |
| advice if necessary. Then subtract from the ARV all | | | | bushes, fresh paint, and all new carpeting for less |
| possible costs you will have, including price, buying | | | | than $7,000, and possibly raise the market value of |
| costs, repair costs, holding costs, and the costs of | | | | the home by $14,000. |
| selling. Now subtract the profit you want, and you | | | | 5. Know Your Buyers |
| have the highest price you should pay. Start with an | | | | A single level ranch in a neighborhood full of retired |
| offer lower than this, of course. | | | | couples, won't sell well to young "yuppies." Know |
| 2. Schedule Properly | | | | what kinds of buyers are likely to want the home |
| More than a few house-flipping projects have gone | | | | (and neighborhood) before you start. Then, after |
| wrong due to falling behind schedule. For example, | | | | improving it with those buyers in mind, market it |
| you think you can get the plumber in and out of the | | | | appropriately. You or your agent should identify and |
| house in the first week, but it takes a month, so you | | | | advertise the benefits that matter to your buyers, |
| can't close the walls up, and everything else gets | | | | whether this includes "close to stores" or "country |
| behind schedule. Meanwhile your spending $2,000 per | | | | living." |
| month on holding costs like loan payments, utilities, | | | | 6. Price It Right |
| property taxes and insurance. So check before you | | | | Selling fast means you save those holding costs. You |
| finalize the offer, to see how long things like | | | | may also have other projects waiting for that |
| windows, plumbing and dry-walling will take. Also, | | | | money. To sell fast, price it slightly below market |
| make completion dates a part of any contracts you | | | | value - and let buyers know it's a deal. It may seem |
| sign with contractors. | | | | that if you sell for $3,000 under market, you're losing |
| 3. First Things First | | | | $3,000, but you are possibly saving a couple |
| On one of those "flip a house" programs on television | | | | thousand in the holding costs you'll pay if it takes an |
| the other night, a young couple was running $10,000 | | | | extra six weeks to sell at a higher price. Also, if you |
| over budget on their first fixer-upper investment | | | | are a serious investor, flipping a house fast means |
| (and six weeks behind schedule). They ran out of | | | | getting the money into the next project fast. Buy |
| money and put the house on the market with a | | | | right, and use the other tips here, and there should |
| crappy-looking yard and stains visible on the front | | | | be plenty of profit left in any case. |
| wall. Of course buyers would see these things first, | | | | |