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5 Vital Tips for Flipping Success (Based on My Mistakes!)

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Flipping is a lot of fun, isn’t it?

You can turn ugly things into beautiful things.

You can hone your design skills and impress your friends.

And let’s be honest …

You can make a lot of money.

But turning the house inside out isn’t as easy as a TV show reminds you of it!

You know that, right?

good! You are already on the road more than most flipping beginners.

Flipping homes can be fun, rewarding and profitable, but it can also be dangerous. Many went bankrupt as they decided to turn the house over.

I lost money on a flip that didn’t go as I expected.

it’s awful.

However, like other venture companies, Practice makes perfection.

Okay, that’s a lie. You will never be perfect with flipping a house. But at least “practice gets better”.

Today, I would like to talk about five important tips for successful home-turning that you should have known when you started your home-turning journey. Knowing these would have saved hundreds of hours of wasted time and thousands of dollars.

Avoid it and find incredible success on your home-turning journey.

But first …

*** Hey you! Yes you are! If you are reading this article, you must like the idea of ​​turning the house over. If so, I would like to invite you to this week’s Bigger Pockets webinar. How to Analyze Fix and Flip Deal (and Avoid Burns!).. Talk about the best way to do math, which is Tip # 1 on this list! Hope you can make it! And now I’m back in the post! ) ***

Now let’s get down to five important tips for successful home flipping.

1. Understand math

Before the paint color, before the new countertop, before dismantling …

There is math.

Mathematics is like a crystal ball and helps you see the future.

It shows you the right improvement to make.

It guides you to the best neighborhood.

It helps you know if you will succeed or fail.

However, so many people are struggling with math. They look at a dilapidated house and begin to think about all the beautiful things a house can do, but don’t know the math behind it. Does it really make sense financially? Does this house really bring great profits? Should you really do this flip?

Math helps you answer those questions. Mathematics helps you gain confidence. Math helps you avoid mistakes.

Mathematics is not as simple as a TV show, but it is not rocket science. It’s just a matter of knowing all your costs and subtracting them from your ultimate profit.

BiggerPockets has a lot of blog posts about flip analysis, so I won’t delve into this topic here.

Also, if not in use Bigger Pockets House Flip Calculator… you are missing. Seriously, it will save you a dozen hours a month by analyzing your transactions!

2. Know the value after repair

When you decide to go inside out of the house, there is one number that is more important to be correct than any other.

ARV or “value after repair”.

In other words, what is the asset value? rear Has it been fixed?

Tip # 1 in this post was to be a math geek when flipping a house, but Tip # 1 starts with this number. If you don’t know the ARV, you have a hard time making a profit.

Related: What is ARV or “value after repair”?

I turned over a house that I once thought would sell for $ 170,000.

It wasn’t.

It sold for $ 120,000.

I didn’t know ARV correctly.

pain.

So how do you determine the ARV of a property?

ARV is determined by what you see other Recently, similar properties have been sold and are being adjusted accordingly.

For example, if a similar home sells for $ 250,000 and it’s a little bigger than your home, you can estimate an ARV that’s slightly lower than $ 250,000. A similar home sold for $ 200,000, but if you have one less bedroom, you can estimate that the ARV will be slightly higher.

Learning to estimate ARV is both a science and an art, but the more you do it, the better you will be.

Of course, this is a very simple explanation for determining ARV. For more information, seeARV Primer EstimateWritten by J Scott, the author of Flipping house book..

Home flipping

3. Consider a partnership

At first, I tried to do everything myself.

But here it is:

I’m really stupid in many things.

Today I noticed this. And I’m not ashamed of it — I use it for my own benefit. I find others who can make the most of what I am good at and make up for my shortcomings.

For me, that means I often use a partner when turning the house over.

For example, I haven’t had the money to turn a house over for a long time.So I use a partner Financing.. I find a deal, I manage flips and they bring cash. (You can find out more about this in my book, Books on investing in real estate without (and low) money.. )

Today I use a partner because I am too busy to turn it over by myself. So I work with partners who have time to become “boots in the field” while working on the part of the business financing and transaction goal-achieving process.

The great thing about partnerships is that 1 + 1 is not always equal to 2. With the right partnership, 1 + 1 can be much larger than 2. .. This is because each person is working on what he is good at and letting others do what he is good at.

So should you be a partner on your next flip? Perhaps. It may not be. But at least keep an eye out for someone who is open to the idea and can cover your shortcomings.

Because we know you have them!

play

4. Strange house = bad idea

Home flipping is often the most beneficial when it is the most boring.

This is because disasters often occur when trying to turn a “strange” house over. The flippers of the best homes I know will flip homes of the same style over and over again.

They use the same material.

the same color.

Same crew.

Yes, it’s boring.But it’s just It works.

I got into trouble in the past trying to turn over a “strange” house. For example, in the flip I mentioned earlier, I thought the ARV would be $ 170,000, but did it eventually sell for $ 120,000?that is Weird house. It was much larger than most other homes in the area. It was a duplex that I turned into a single house. I thought it was more valuable because I could see the wonderful sea view.

Related: 5 smart ways to reduce the cost of corrections and reversals

But it was strange, so hitting the ARV correctly was incredibly difficult.

When you get into flipping a home, it’s important to flip the most common homes people want to buy. If everyone wants a 3-bedroom, 2-bathroom home in neighborhood B, why flip a 5-bedroom home in neighborhood D? Turn over what people want to buy!

Yes, it’s boring.

But you can’t complain when money starts to flow.

Is the answer to my contractor's problem to start my own company?

5. Continue to work as a contractor

One of the reasons many investors fail on their home-turning journey is because they can’t manage their contractors properly.

If unmanaged, even a good contractor can double your budget and schedule. It is your job to properly manage those contractors and keep them working.

One way to do this is to hire only the best contractors. Carefully select, call reference materials and work with people who are ambitious and quality craftsmen.

Once you start working with a contractor, you always want to keep the contractor “hungry” and want more money. You will never pay everything in advance, but only release your funds after the benchmarks have been achieved in the field. This allows the job to run quickly and efficiently.

Don’t miss out on other tips on managing contractors 8 Easy Tips for Managing Contractors Without Losing Your Mind..

Conclusion

I have! Follow these 5 tips. That way, you’ll never make the mistake of turning the house again.

just kidding.

Of course I do.

But follow these five tips. That way, you can definitely reduce your mistakes. These tips reflect some of the biggest mistakes I made on my trip around the house and I hope I can avoid the same mistakes.

If you enjoyed this post, you need to make three simple requests.

  1. Share this on your FB or Twitter wall. Helps spread information about Bigger Pockets.
  2. Please comment below and let us know what you think. Any other tips you would like to share? Do you have any questions about what I said? let’s talk!
  3. Sign up for this week’s webinar. How to Analyze Fix and Flip Deal (and Avoid Burns!).. See ya!

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