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Wednesday, 18 September 2019
Agent Resource Center
This Old House - Do-it-Yourself

Important Tips For Effectively Flipping a House

Written by Posted On Friday, 06 September 2019 14:28

Flipping a house entails real estate investors purchasing homes of an auction, and then reselling them for a sizable profit a few months later. Follow these tips in order maximize your gains and minimize your losses.

 

Analyze The Market

Before you undertake any real estate venture, the first thing that you will want to make sure you do is analyze the market that you are going into. Certain aspects that you will want to specifically study is to understand where people want to live and what kind of houses people are int he market for.

 

You do not want to speculate regarding neighborhoods that are not well-known because they can be volatile in nature. You should bear in mind that you do not want to sell these houses quickly.

 

Abide by the 70% Rule

The 70% rule is incredibly important when it comes to flipping houses. This rule states that an investor should be paying 70 percent of the ARV (also known as the After Repair Value) of a property subtracted by necessary repairs. The ARV is determined after the repaired value and is the total worth of a home after repairs are done.

 

When it comes to using this rule, you should understand how much house you are able to afford, and how much you are willing to lose on any deal. Those who have high experience follow this rule to the letter because it helps alleviate the risk of overpaying for a house.

 

Learn The Average Price of Projects

If you are going to flip a house for profit, you are also going to have to become well versed in how much it would cost to rewire a house, landscape a yard, build a deck or re-carpet altogether. Every project has its own unique set of dynamics, but you will be able to estimate the cost of home renovations with experience.

 

Some alleviate this issue with proper construction document management while others perform renovations in their own home. This will also help you tremendously in getting into specific projects that you want to do.

 

In addition, knowing what specific home improvements are needed to increase the value of a home is also required. Whether this is a repainting of the exterior of the home or upgrading kitchen appliances, knowing what needs to improve will help you maximize your potential return.

 

Do Not Be Afraid of Negotiation

The art of selling the property and negotiating as high a price as possible can help you flip a house and maximize your return. You never know how high a prospective buyer may be willing to go if you do not push the envelope a little bit.

 

There are certain tactics that an even help you if you haven't been one to negotiate often. One such quality that is prominent in many successful negotiators is the ability to keep a poker face. You should always keep your options open, refrain from making the first offer and never negotiate with yourself.

 

Ideally, you will want to sell the buyer on a price, but once an offer on your end has been made, do not negotiate another price until they respond with a counteroffer. Negotiations are always back and forth, as you can imagine. Do not expect this to be a brief process, as the buyer will also look to save as much money as possible while you are trying to maximize your earnings.

 

Network with Buyers

Establishing an early rapport with interested buyers will give you an advantage in building relationships for both the immediate and long-term future. If you already have someone lined up, the home may sell quickly.

 

As you can see, there are important steps to follow in order to gain as much profit from flipping a house as possible. Take heed to these tips, and you will be able to accomplish that.

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