Are you thinking about getting involved in real estate investing? Home flipping offers savvy investors a way to earn a decent return on their investment relatively quickly. A house flipping business plan helps keep your project on track and within your planned budget.
Here are some tips for making a house flipping business plan that works.
Know Your Market
To make the best house flipping deals, you need to understand the market where you’re making an investment. Questions you should have answers to include: what comparable homes in the area are selling for, the average length of time that similar residences remain on the market before selling, and bigger trends that could affect the overall housing market in the area.
Questions you need to answer:
- What are comparable homes in the area selling for?
- How long are similar residences on the market before selling?
- Are there bigger trends that could affect the overall housing market in the area you’re making an investment?
Making an Accurate Valuation of the Investment Home
The art of the “Fix and Flip” is making a profit! By knowing what the market will bear, you want to avoid paying too much for a home initially. If you pay too much for the property and have to make repairs, your profit decreases substantially. Always be sure that you have enough money on hand to not only buy the house but to also cover needed repairs.
Some fix and flip homes may only need relatively inexpensive upgrades. Examples of this include new flooring or a coat of paint to improve their visual appeal. Other investment homes, especially those being sold in foreclosure are a little riskier.
Foreclosure homes generally can’t be viewed before buyers make a bid on the property. Investment buyers could find themselves on the hook for larger repairs such as adding a new roof, fixing the plumbing or electrical systems. For this reason, it’s always a smart idea to have extra funds set aside if the property you’ve bought needs more repairs or renovations than you initially expected.
A House Flipping Business Plan Includes a Project Deadline
People who flip homes to make a living know the importance of setting deadlines to keep the project moving in a timely fashion. An efficient house flipping business plan clearly indicates how long you expect it to take from “fix” to the “flip.” Anytime that a house flipping project takes longer than you expect or costs more than what you’ve budgeted, you’re losing money and time.
Especially if the project is preventing you from making new deals and acquisitions.
Regardless of whether you are doing renovation work yourself or you work with trusted contractors, a fix and flip project completed on deadline and within budget typically yields the best ROI.
If you are looking for help and guidance on establishing a house flipping business plan, NREIGRP.com can help! Our National Investors Group offers education, training, and the network you need to succeed!
Give us a call at 866-871-9170 to discuss our options!