Thinking about flipping a home or investing in real estate is very exciting. You picture yourself walking through a construction zone picking out flooring and pointing out where changes need to be made. This is your vision. One that could make you large profits.
But, there’s more to flipping than being the foreman on the job site. You need to be well prepared BEFORE you put an offer in on a home that needs a little TLC. This will avoid big headaches down the road.
Here’s some tips on what to do before signing on the dotted line:
- Before you see a realtor, make sure you have a pre-approval letter. If you’re a cash customer, you won’t need this, but you’re wasting your and the realtor’s time if you don’t know what you can REALLY afford. You might think you know, but it all comes down to what you’re approved for. Without that, you more than likely are looking at the completely wrong type of house that you need to purchase.
- Research a real estate agent. Make sure you are working with someone who is familiar with buying real estate for investment. The majority of realtors are working with clients who are looking for primary residence or vacation homes. It’s even better yet if you can find a realtor who invests in properties herself. This will save you even more time. And we all know time is money and can kill a really good deal.
- Have a plan. How long can you afford to work on a home? How much do you want to invest into it? What time of year do you want to list the home? What are the BEST neighborhoods to invest in? These are all answers you need to have before buying. You don’t want to get talked into a home that needs major renovations and you have to have it back on the market in a month. This isn’t feasible and will cut into your bottom line. Plans are major.
- Have a team in place. We hate to break it to you, but most investors can’t pull off flips on their own. Who’s going to help you? Do you have agreements in place? Not only do you need to be ready to pull the trigger, but your team needs to know that: A. They are part of your team and B. That it’s Go Time.
- Don’t think you’ll skip due diligence. Think you’ll just do this quick without an inspection? Don’t need to look too closely because you plan on gutting the house? Think again! Don’t be in such a hurry that you can miss major structural issues with your investments. Be ready to take your time and make an educated decision. Again, money, money, money!