Don’t Invest In Homes With Mechanical Issues
When buying a house for a flip, it is very wise to only focus on properties that need mostly cosmetic improvements. A home which will require a new roof or that has outdated aluminum wiring electrical systems will likely be too much of a hole in your pocket to turn a reasonable profit. Very much get an inspection and avoid any home which could have potential foundation problems unless you can fix it yourself, as this will be a huge cost. By setting your sights on homes where lower cost improvements are needed like a fresh paint, new flooring, replacing trim and kitchen appliances, you’ll be more likely to cash out in the end.
Inspect The Property Before Removing Subjects
You may have had a bad experience with a previous inspector. He or she may have missed so much stuff you now think this is a useless move. Or you may have a background in construction and think you can inspect the home yourself. However, making an impulsive purchase puts you at serious risk. I can’t tell you how many times an older person, who is set in their ways, has been told from Ryan to get an inspection and they have opted out due to their past experiences. Get an inspection. No one will judge you for it. They have insurance should they miss anything and you need to go after them afterwards. It is very much necessary to get an inspection to accurately assess the condition of the property properly and budget for repairs. This will help you create a detailed and accurate budget plan before applying for financing. This will also give you a clear understanding of how much funds you will need to ensure that the project will be completed successfully and sold for a profit.
Draw Up Your Profit Margin Carefully
You need to carefully and accurately calculate what your profit margin on any flip is going to be and weigh that against your costs, including your holding costs. Also, consider possible “brain damage” like the stress and strain you are going to encounter and experience when flipping a house, and include that in your profit margin. It can be very mentally demanding to fix and flip a house in maple ridge.
Plan For Different Potential Exit Strategies
The goal of the flip is to sell it fast and make a profit. However, there are a few things out of your control when renovating that may change the outcome. What happens if the real estate market shifts? Financing rules change? Or the economy changes for the worst, and you may end up having to sell quicker than expected? Newbies who are starting in the fix and flip game may end up spending more than their original budget or take too long to complete the project. Planning to hold and rent should be a mandatory factor to your property choice. It’s better than taking a loss. How to check on rental? Simple, you want to ensure that the property in question is cash flow and you can still make money off the rental. In the long term, the loss will become a gain as long as you planned for other outcomes. If the worst happens, if you have to keep the house, are you still going to make money in the longer term?
Know Who Your Buyer Is
Demographics, zoning, location, and city plans can have a major factor in this. Get in touch with Ryan Taylor from Sutton Group to go over who will be most likely to purchase your flip property.
Select Properties That Can Be Renovated Quickly
TIME IS MONEY. Select a property of which you can do fast renovations and unload quickly. It is common to see flippers use borrowed money to make the flip happen. When on a borrowed dime, it’s also borrowed time. Those who have flipped a few Townhouses in Langley know what Ryan is talking about. The longer it takes the more you are out of pocket for profits.
Know The Right Improvements To Make
When flipping condos in white rock, or any other property for that matter, it’s important to know which renovations will actually bring a profit. It is possible to do the opposite effect on sale price by doing the wrong renovations. Make sure that you are aware of current and upcoming industry trends. Don’t be afraid to ask for advice from local Realtors in Langley, Tricities areas or wherever you are thinking of flipping. Don’t go too expensive in a lower end area, but do try to incorporate the newest technology in heating, ventilation, air conditioning, plumbing, electrical, appliances, and other smart home improvements if you have the budget to increase the value of your house.
Don’t Go Too Big
If you are new start with a townhouses under $500,000 in Maple Ridge where the renovations will cost less than $50,000. Buying a large property with a massive renovation investment cost is going to be very very risky.. especially when you are very new to the game. You’ll be a lot happier should you underestimate the cost of repair and you need to hold and rent the property in the long term. Rental income is higher on a better looking and functioning condo in Langley than one that is in disrepair.
Be Sure You Only Fix What Is Necessary.
Continuing from above.. only fix what is necessary. Over improving a property won’t give you the desired return on investment (ROI) you are working towards. Remember that this is a business and you are not fixing up a property to make it into your dream home. However, if you are fixing and flipping a multimillion luxury house in White Rock, for instance, it’s an exception to this rule as this kind of flips need to be impressive.
Renovate Bathroom Vanities
One of, if not, the most important improvement needed in a fix and flip project is the bathrooms. If you renovate bathroom vanities, consider floating vanities with natural colours which are soft, modern, and have rounded edges. White quartz counters work wonders in bathrooms. When you’re choosing the colours for cabinets, consider other tones and hues other than white. Natural walnut, mint, black, and charcoal are hits in the local market. White does still work in darker smaller areas but try to stay away from Greys.
Add A Couple High End Features To Your Property
Try incorporating a few higher end features even to properties in lower end price ranges. A great example is when updating the kitchen, you can add a wall mount range hood. A good wall mount range hood should only cost an additional $100 to $200 but looks much more expensive. This allows you to market the house for top dollar and help get you what we all want…earn a bigger profit.
Buy The Worst House In The Best Neighbourhood That You Can Afford
The “worst” means very poorly designed and dated cosmetic shape. Worn out hardwoods are perfect as they often can be refinished. Sometimes in older homes you may actually find rich oak or cherry hardwood under carpet as the last owners fell for the carpet craze of the 80’s. Remember paint is just lipstick and can also easily be fixed. Smelly houses are perfect as many people do not know what an ozone machine is and what wonders it can do. Older builder grade kitchen cabinets are also easily fixed and generally not too expensive to repair or replace. Just make sure the houses has a solid foundation and useable mechanicals or, that the strata for the complex has a good contingency fund and a depreciation repair that fits your plans for renovation and flip.
Be On The Hunt For Up And Coming Neighbourhoods
Be on the hunt for an area that has a good future but inexpensive prices as these can often equate great flips. If the area has a development of new infrastructure by Polygon, Foxridge, Concord, Morning Star or any other major well known developer who has been around a while, it most likely has a bright future. Other things to look for is a neighbourhood that’s widening their streets or constructing new shopping centers as this is usually a good indicator as well for potential. Make sure to pick the right neighborhood by doing proper research about an area’s future development plans with the city. Get a Realtor like Ryan Taylor who will go to the city and look into future potential zoning changes and development.
Lastly, Leave Room For Unexpected Costs
It always happens. Even to the most seasoned investors and developers. Even with a super thought out meticulously crafted budget and plan for expenses, there is a good chance that a problem might come up which will be an added cost to your project. This can kill the whole project. It’s always better to have a sufficient buffer (or pillow) in the budget for contingency expenses, typically around 15% or more should do the trick.