To Flip or Not to Flip That is Today’s Question.

To flip or not to flip. With the some markets rising in prices you might think its a good opportunity to maybe flip a house.

What does it mean to flip a house? First you have to buy the house at a discount, and then can’t stress this enough ADD VALUE. Followed my reselling it. Simple Right?

Now I don’t want to say there are rules to follow I will call them guide lines.

  1. Who is going to buy the house from you? Are they going to get a mortgage from Freddy or Fanny? If so, you need to follow the seasoning rules with those institution, 90 days last time I checked. Is your buyer going to make it a rental due to the neighborhood or is it going to be a homeowner?
  2. What do current buyers look for in houses currently. This question would be good to check with Realtor’s in that specific area. If you ask a Realtor who does not specialize in that area you can over build or under build. Both of which will lead to added cost.
  3. I bring up 1 & 2 prior to the rest cause the first ones will get you paid!! If you think about it after you get the property it can let you to keep the house cause you can’t sell it :(
  4. Where is you money coming from? Cash is best, Line of Credit, Personal Loan, Private Loan. This is part of the info you need cause it will be a cost that has to be added into the deal.
  5. Who is you contractor? DO NOT USE THERE CONTRACT. It is written to benefit them. Have you own. If you don’t have one ask fellow Real Estate investors or find one on the internet or big box store. These are boiler plate contract READ though them and add what you think is best for you or have your attorney draw them up or even read them over. You don’t have a contractor? Again ask your fellow Real Estate Investor. If the are mum Angieslist.com would be another suggestion. You also can Google what you are looking for, you can even look in the phone book. Get a few estimates on the work, when I say  a few I mean at least 3.
  6. Pull Permits last think you want is the city coming in and shutting your project down. Or worse having the next owner coming back and suing you for not pulling them. Or doing work twice cause they did not look at any adjustments behind walls. I know city’s CAN be a pain in the ass to work with, but do it. They are still people.
  7. When you evaluate a potential deal look for the other hidden cost. Realtor’s, utilities while the project is going, and permits.
This is a few of the many little details that have to go into a flip. Use you best judgement when completing it. To wrap it up What to you have to do, build for the buyer, keep finance in mind. Money costs, Contractors, Permits, Hidden cost.
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