Locating A Potential Investment Property To Flip
Locating a Potential Investment Property to Flip: Flipping houses has become progressively more popular. Unfortunately, the sudden gain in popularity of the idea has caused a fair amount of competition among would-be-investors who are considering trying it out for the first time. The increased awareness of house flipping often serves to drive up the costs involved in obtaining the property, which only lowers the potential to turn a nice profit. However, low priced properties in need of repair and are good candidates for a flip are still out there. Once you find a property you are considering, answering the following questions will help you decide whether or not the property truly is a good candidate.
1)Have you had a property inspection to establish the amount of repairs that need to be made to the property? What about the landscaping? Is it just cosmetic work, or a costly overhaul? These factors are important because each repair takes a chunk out of your budget. You want to finish the job with as little additional financial investment as possible. Your goal is to get the greatest return on your real estate investment.
2)Is the property appropriate for the location? By this I mean, is the property a three bedroom residence intended for a family, built in the middle of a retirement community? We've all seen the misplaced duplexes in the middle of beautiful upscale neighborhoods. These mismatched properties may seem like a good deal at the time, but can cause real problems when it comes time to sell.
3)Can the neighborhood bear the value you need to bring in from the flip? If you are creating an upscale residence in a marginal area, you are almost promising yourself a loss on your investment. Ideally, you want to locate a home in need of repairs, with a low selling price that is located in a neighborhood of much more valuable homes. This type of find will bring in the profit you are hoping to get when all is said and done.
4)Can you make the repairs and cosmetic upgrades that are needed, while keeping within your budget and without radically changing the structure of the house? This is a huge factor, and one that often gets disregarded. You do not want to start knocking out walls or building additions when flipping a house. That is something to be decided upon by the new owners. You want to make as few changes as possible and only those that will improve the worth of the home.
5)Can the necessary improvements be made in a reasonable time frame? This is another big deal in a house flip. It takes time and money to make the changes that most "flippers" have in mind for their investment, and first time flippers sometimes get carried away. Do you have the time to stick with it and the financial resources to cover the carrying costs while you are in the process of making the changes?
6)Is the property in a high demand, desirable neighborhood and city? This is yet another common mistake. Do your homework and find out the perks of the area. Are there exceptional schools, nearby parks, low crime rate? All of these factors are important selling points. It is often easy to find extremely low priced properties that seem like a deal at first glance, however; if you can't sell the property you purchase to flip it really defeats the purpose of putting the time, effort, and financial resources into making the improvements.
7)Can you do the work yourself or will you need to subcontract the work to professionals. If you need to hire out, make sure you get your quotes first. Don't just guess at what a professional will charge. If you plan to do the work yourself, be careful that you do not overestimate your abilities. It is easy to assume that you can install tile or repair the plumbing, but the reality of doing it is quite another matter.
Keep this list handy and answer these questions when checking out potential real estate investment and house flipping properties. If you are realistic and do your homework first, you should be well on your way to a successful flip!
About the Author:
L J Sutherland is a real estate investor, author and mentoring coach. If you have an interest in learning to Be a Real Estate Investor, go to his website right now; take advantage of his free e book on "Residual Income Through Real Estate Investing" at http://becoming-a-real-estate-investor.com/sf1/
