For the novice house-flipper, sticking to a tight budget during the renovation process is a crucial part of ending up with a profit after the project is complete. To do so, every detail involved in repairing and rehabbing the property must be itemized and assigned a budgetary limit and a specific time frame for completion before the project even begins. But new investors can take this process to another level by screening potential homes more carefully before choosing one to purchase for the flipping project. If you are ready to buy a property and want to take every precaution to protect your project budget and your future profit margin, the following tips can get you off to a great start.
Choose an area where the rehabbed property will compare well to existing homes
It can be tempting for a novice investor to use price as their only guide when buying that first flip house, but doing so can be a huge, costly mistake. Instead of purchasing the cheapest home available, investors should always do their homework to learn market trends for each area they are considering. In most cases, the very best area for any flipping project will be one in which there is an available property that can be successfully purchased, renovated and sold for a price that is comparable to other homes in the area while still allowing the flipper to earn their needed profit margin.
Fully utilize the inspection process to eliminate expensive repair issues
To help ensure that the home does not harbor any hidden repair or condition issues that could quickly obliterate their budget, novice investors must fully utilize the inspection contingency in their purchase agreement. In addition to a standard home inspection, investors should also consider ordering inspections for the parts of the home that will be most expensive to repair, such as the major systems of the home (HVAC, plumbing, and electrical), as well as the foundation and roof.
Research zoning and title issues before finalizing the purchase
Since time can eat into the profit margin almost as stealthily as the discovery of hidden repair issues, investors should also be sure to research each property for zoning and title issues before agreeing to the purchase. Any of these potential issues can result in costly delays in closing or in problems with obtaining permits for the work that must be done.
The ideal house for a first flipping project will be one with mostly cosmetic issues and good potential for quick completion and a fast sale. Novice investors who want to streamline the process of finding these homes can do so by working closely with a real estate professional who specializes in residential investment properties in your area.
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