Join the "Fix and Flip" Market
It sounds tempting; buy a run down property, fix it up and sell for a big profit.
In order to be a successful "flipper" you have to put your emotions aside and listen to the numbers. First, find the right run down property, with the help of an experienced Realtor, who can help you identify a hidden gem and its future sales potential. Secondly, determine the cost to update the property and the carrying cost for the financing. Thirdly, determine if the difference warrants your time and risk.
There are 3 areas of the house that can become money pits: electrical, plumbing and heating/cooling systems. These systems are costly to repair or replace in relation to the value they return upon resale, so have your inspectors lined up and ready to go. Also pay close attention to the roof, foundation and structure. Problems here are red flags and undertaken only if you have experience in these areas and can confirm the return on investment is substantial enough. The ideal property will need "heavy cosmetic" work, not work associated with the bones of the property.
Because time is money, have your contractors in place and ready to go once you have an accepted offer or find a reputable remodeling company and get on their schedule asap.
Use the following procedure to get to work flipping you new investment.
- Order a dumpster for the next ten days and get your demolition crew to throw out everything not staying in the property.
- In parallel or immediately after, perform any repairs that involve breaking into the walls.
- After the house is cleared of debris and repairs complete, it’s time to patch and paint. Let your painters blast the place with their airless paint-spraying arsenal inside and out. Within three days, you’ll have added a huge improvement to your investment. This is the biggest dollar-for-dollar return you can make. Make sure that quality paint is used. When it comes to painting it’s the labor that kills you, not the material.
- After the painters leave, the flooring team can lay tile and carpet, which will take two to three days.
- Next bring in the cabinet installers and handyman plumber.
- Last comes light fixtures, vanities, toilets, sinks, doors, switch plates and outlet covers.
In under 2 weeks you have flipped your property. The house is either ready to rent out or be sold for a lot more than financial investment that was put into it. If you don't have the time or energy to take on this kind of a project, another option is to purchase investment property. This can be either a single family home that is rented out or a multi-family property such as a duplex, triplex, fourplex or larger.