Thanks to popular home renovation shows, more people than ever are interested in investing in fixer uppers—and then flipping those homes for a profit.
But if you’re new to house flipping, chances are, there are a lot of things you don’t know about the process—things that you typically learn from experience.
So, what would experienced house flippers tell people just starting out? A recent article from realtor.com outlined tips for new home flippers from experienced home flippers to help them succeed in 2021, including:
- Don’t pay too much up front. The entire point of flipping a home is making a profit—but if you pay too much for the home up front, you’re not going to make that profit. Generally, when you’re planning to flip, you don’t want your maximum allowable offer (MOA) to be more than 70 percent of a home’s after-repair value minus the costs for repairs and renovations—otherwise, your chances of making a profit are slim.
- Pad your renovation budget. Renovations almost always cost more than you anticipate—and if you don’t build those unexpected costs into your budget, it can have a negative impact on your bottom line. Make sure to build a buffer into your renovation budget—ideally about 25 percent—if you want to ensure your flip is profitable.
- Go with the best contractor for the job—not the cheapest. In an effort to save money, you may be tempted to go with whatever contractor gives you the lowest bid. But going with the cheapest contractor can end up costing more in the long run if that contractor is unreliable, or doesn’t do quality work. When evaluating contractors for your flip, price is certainly an important factor—but make sure you’re hiring the right contractor for the job, even if that contractor isn’t necessarily the cheapest option.
Bottom line? If you’re thinking about getting into house flipping, you’ll definitely want to consider heeding the advice of flippers with more experience – and save yourself a lot of time, energy, and hassle in the process.