What to Know Before You Flip a House
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So you're thinking of buying a home to flip it and hopefully sell it for a profit. Before you do, there are a few things that you should know. Flipping a home is not easy and a good majority of the time, you end up spending too much on the buy and renovations to make a profit that makes it worth it. With the rise of many HGTV shows like "fixer upper", so many individuals have decided that they have what it takes to be a home flipper. That's great, but really weigh all of the pro's and con's here before you buy the home.
The first thing you seriously need to consider is the price of the home you are buying. Believe it or not, this is where you make your profit, not on the renovations. Make sure that you are getting a good deal on the home you are buying, and consider the renovation budget. Before you buy the home. be sure to get an inspector to look at it so you can get a better idea of the renovations necessary and the money that will go into that so you can consider everything before buying.
Always, always, always set your budget higher than expected because things go wrong, prices rise and fall, and there will always be unexpected expenses in renovating a home. Furthermore, unless you are a training professional, do not do all of the repairs and renovations yourself, odds are you will still have to end up having someone come out to fix something. You want to ideally aim for 30% ARV or After repair value. You want to make a 30% profit when it is all said and done.
In order to do that, you need to know your market, sell the house 1-2% below market value, and do not get greedy. Just because you designed that house from top to bottom and it is your pride and joy does not mean it is of that value to the market or any buyers. Remember to be realistic and keep your buyer in mind during every step of the process.
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