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7 Simple Tips For Flipping Real Estate
Unless you’ve been living under a rock for the past few years, you’ve probably either dabbled in real estate yourself, or at the very least, know someone who has. So, how does someone that’s brand new to real estate start flipping homes? (And let’s clear the air right now… IT IS NOT TOO LATE to start investing in real estate).
Follow these 7 tips to start investing in real estate today:
1. Look In Your Own Backyard
The grass is always greener in the other neighborhood, and it’s easy to keep looking for the “right” area. The bottom line is that any area is the “right” area. In order to be effective in the steps 2 through 7, you’ve got to get over the idea that real estate deals only exist in other areas. It sounds cliché, but there are plenty of deals in your own backyard. Not to mention, it’s easier to manage and you’re likely to know the values in and around your area.
2. Find the “Right” Property
Not every piece of real estate is a good investment – even if you can “steal” it! Make sure you look at things like:
• Property Location – Will you be able to sell the property once you’ve renovated it?
3. Have A Thorough Inspection
Unless you’ve been flipping real estate for a while or have a background in construction, then it’s a good idea to have a full home inspection. It may cost you a few hundred dollars, but will catch things that maybe you didn’t know to look for. When flipping real estate, it’s the “little” things that add up very quickly and can eat up your profits!
*** Bonus Tip*** Use a home inspection to help renegotiate the purchase price OR ask for a credit toward repairs.
4. Don’t Get Emotional
Real Estate is emotional by nature. Investing in real estate cannot involve your emotions. It’s got to be all business. If the numbers don’t work, move on to the next. So many times, people are so desperate to flip their first deal that they make bad decisions just to do something at all. Then, they’ve become so attached to the deal that they try to sell it for higher than the market will bear and end up holding the property longer, reducing their profit and getting left with a bad taste in their mouth.
Late night infomercials will hype you up with pipe dreams of flipping real estate for millions of dollars in profits and no work. You’ve seen the testimonials that go something like: “Mary Smith purchased this property for $100,000. It cost $10,000 in repairs. She flipped the property for $140,000 and made $30,000”. Somewhere on the screen, you see in teeny tiny print: Results Not Typical. Your Results May Vary!
Of course results are not typical because those results assume that you buy the property for all cash and pay no closing fees and have no monthly costs. Be VERY cautious of deals that you see that sound like that!
In the real world, costs associated with flipping real estate are:
• Purchase costs: Upfront mortgage fees, attorneys fees, regular closings fees, title, survey, etc.
Whether you’re flipping a real estate deal here and there or you’re looking to make real estate your new career, it’s important that you know – and figure – your costs into your calculations. Keeping this in mind will help you keep from getting emotional (See Tip 4)
6. Keep Track Of Your Progress
You can’t improve what you can’t measure! Throughout the entire project, you’ll want to constantly track your progress. This way, you’ll know, at any given time, where you stand on the deal. This will help keep you focused by keeping the bottom line in front of you all the time.
7. Expect the Unexpected
In virtually every single property you flip, you will run across SOMETHING that you simply didn’t expect. Whether it’s an issue that pops up 2 hours before closing that needs to be handled or a big surprise when you peek behind the drywall that you had to replace! You’ll almost always run at least a little over budget or hold it a little longer than you anticipated. But at the end of the day, you’ll have the satisfaction of taken an ugly house and turned it around and depositing a healthy check in your bank account.
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