Have you thought about flipping houses in Columbus for a profit? Are you an experienced investor looking for an income property? At 43 Homes, we are skilled agents, many of whom are also investors, that can help maximize your return on investment.
We provide our investor clients:
- A customized search for properties that meet your investment criteria.
- A personal web portal to organize your search.
- Investment analysis of potential properties, including pre and post renovation value estimates.
- Contract negotiation in order to help get you the best possible price and terms.
- A list of contractors and vendors with whom past clients have worked.
Separate Fact From Fiction When it Comes to Flipping Houses
You’ve seen the ubiquitous television shows where apparently savvy real estate investors make thousands buying and selling homes in six week and thought, I could do that. Perhaps you can, but before you decide to take a leap of faith and buy an investment property, make sure you are living in the real world and not on “reality” TV.
1. First and foremost, establishing your team is top priority.
Home renovation is A LOT of work and regardless of your experience and skill level, don’t count on doing all the work yourself. Instead, build a repertoire that includes a real estate agent (don’t look to far to find one – hint, hint), general contractor, electrician, plumber, painter and laborers.
2. Be prepared to manage your team closely.
There are many good contractors in this world. Having that been said, there are just as many who would be just as happy to take your money and run. If you dream about getting the keys and waiting for a big reveal, then flipping homes for a profit may not be for you. You need to ask your team questions (lots of them) and take an active role. Whether that means being onsite frequently, sourcing materials or just keeping out a watchful eye, if you listen to no other advice, listen to this and be hands on.
3. Be realistic about your renovation budget.
Light switches, outlets, tile, carpet, bath fixtures. Am I forgetting anything? The answer is yes! Always, yes. Whether you have flipped one or a hundred houses, it is impossible to anticipate every expense, so be sure to build in a contingency for surprises and items not included in your original budget. Once you are more experienced, 10 percent above and beyond your total budget should be sufficient. For the first several times (assuming you decide to do it again), count on a minimum contingency of 20 percent. This will help you more accurately project potential profit or loss. Yes, I said loss. Did I mention that house flipping is a risky business?
4. There is truth to the saying time is money, especially if you are financing your flip.
Every day of owning a flip your bank account is essentially bleeding money. Utilities, taxes, insurance, interest and labor are the most common and largest expenses you will incur. This is just another reason to not do all the work yourself. In the long run, it may actually be cheaper to hire out jobs in order to finish the project quicker.
5. Pricing the house once completed will be the biggest decision you make.
It’s easy to think highly about your newly remodeled house. After all, you literally poured blood, sweat and tears, not to mention large sums of money into it. Having that been said, it is important to be realistic. Market exposure will be highest in the first two weeks the house is on the market and overpricing the property can cause that attention to go to waste. On the other hand, underpricing the listing can cost you profits. Remember the real estate agent that sold you the house? Lean on him or her to help you make the right decision.
6. Television shows often only tell half the story.
We are not going to get into fact versus fiction here about TV shows, but I will mention that their profits are often skewed by not including things like title company fees, carrying costs, real estate commissions and other items mentioned in number 4 when talking about how much money they make. Which leads me to number 7…
7. Last but not least, have an idea of potential profit before you EVER make a real estate investment purchase.
Your real estate agent should provide an estimated post renovation value upfront. Some investors also choose to hire a real estate appraiser for a second opinion. A good valuation should depend upon similar properties within a half mile radius (taking into account different neighborhoods in some cases) that have sold within the last six to 12 months.
I have said it once before here, but it is worth saying again, it is very important that you keep a level head about income potential and early on if you can make money on the house. If not, then don’t buy the house. Flipping houses is not for the feint at heart and sometimes the best deal is the one you never make. And while the process is stressful, it can also be enjoyable and lucrative.