There haven’t been many positive aspects of the recent recession—unemployment reaching record highs, many struggling to make ends meet, limited job prospects—and one of the hardest hit industries has been real estate. But there have been some unintended blessings. For those interested in flipping houses, now is the ideal time to get started since house prices are still low but the market is beginning to pick up.
The key to flipping houses is, of course, making a profit. Being able to purchase a property, renovate it, and then resell it and end up on the plus side is what makes it all worthwhile. Unfortunately, it’s not quite that simple to accomplish.
The amount to time, money and effort that goes into flipping a house depends largely on each individual house. With so many houses in foreclosure or short sale there are a lot of great deals out there; however, there are many that require a lot of work. Working closely with a realtor or property assessor can help you determine a reasonable price for the property and how you can invest in the property while still making a profit on the resale.
With any renovation having a budget and sticking to it is vital. It is reasonable to assume that the more invasive the renovation—adding on, removing walls, or gutting the place completely—the more money it’s going to cost and the more likely you will be to find other problems that require even more time and money. Allow space in your budget to cover unexpected expenses. Prioritizing the changes you want to make can also help accomplish the things that you need to and help you know what to cut if the cost starts to cut too much into your profit. There is also no guarantee of how much the house will sell for, although comps can give you a ballpark price range for the area, so be mindful of that when setting your budget.
Ultimately you want a house that looks great and sells quickly. Don’t get too caught up in high end finishes or extremely unique architecture—although there is a niche market for those types of homes—that could leave your home on the market too long or take too much from your budget and negatively affect your profit.
Cole Ramsey contributes blog posts and articles on real estate, the housing market, and finance to websites like this.