Property flipping is not nearly as easy as the pros make it appear to be, but that doesn't stop an untold number of novices from trying their hand at it, year after year. Whether you choose to go at it alone or put together a team of skilled professionals who specialize in different things, being successful at property flipping starts with buying the right real estate. These are five things all budding property flippers should know about real estate, and how to launch your start in the market.
1. Property Inspection and Walk-Through Limitations - When homeowners fall behind on their mortgages or property tax bills, either the bank or the county steps in to reclaim their properties. In most cases, these properties are then boarded up and left vacant until a buyer comes along. Unfortunately, scheduling a tour of these types of properties is unlike going to view foreclosures. Get as much conclusive information as you can before putting in an offer to buy any bank or county owned property.
2. Revitalizing Real Estate Takes Time - So you buy a distressed property, take possession, and at first glance it structurally looks like everything is in order. You may decide on which specific home improvements you will be making, and how long everything will take to get done, but you have no clue what awaits once demolition begins. Prepare to spend much more time completing your first property flips, as you can expect to encounter surprises.
3. Most First Time Property Flippers Go Over Budget - Buying distressed real estate and fixing it up is cheap because raw materials aren't expensive, and labor costs can easily be managed down. Unfortunately, there's no such thing as a simple property flip. There will be some expenses that you neglect to take into account, and there will likely be supplies, labor costs and equipment that need to be acquired to maximize profit expectations.
4. You Property May Sit on the Market for Awhile - Until you really get to know the real estate market that you are selling your properties in, the improvements and repairs that you make may not immediately attract buyers. At certain times of the year, the market will not show much movement at all, so you have to be prepared to maintain your homes for sale until they are purchased.
5. Quit Claim Deeds Come with Caveats - There are some property flippers who track down homeowners willing to be bought out for whatever amount remains left to be paid on their mortgages. Although this type of arrangement allows you to buy properties that are generally in much better shape, you may still end up doing around the same amount of work. These properties may also come with liens and other financial obligations attached, so look carefully before agreeing to sign a quit claim deed.