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Flipping a house can be a great way to make money if you’re familiar with the process. When you’re new to the business, though, it can be easy to make mistakes. The most important decision you’ll make is choosing your first flipper home. Looking at the factors below can help you to make the right choice.
Location Pros and Cons
One of the most important things to consider when looking for a house to flip is the location. You can change virtually everything about the house but you aren’t going to be able to change where it is situated. Try to look at the neighborhood surrounding the house to be flipped to decide if you’re going to be able to fetch a price that’s actually going to allow you to turn a profit.
Cost is usually the biggest factor for house flippers. Your goal shouldn’t just be the find the cheapest house to flip – it should be the house that carries the right percentage of risk in relation to reward for your investment. While buying a house at a foreclosure auction may give you a home far below market value, you may be getting a house that needs a greater investment in terms of renovations that you can handle or than may even be worth it.
Working with a residential real estate company may come with a greater investment when buying the home, but it also comes with certain quality guarantees. A real estate company will be motivated to get repeat business with you by catering to your goals rather than trying to slip a trash home through your radar. For a greater buyout cost, there will be much less you’ll need to pay to replace and repair, allowing you to scale the investment cost to better meet your end goals than going for the cheapest on the market.
Personal Comfort Levels
Your ideal flipper house should also be something that’s within your comfort zone. If the job feels too big for your crew or you feel like taking on the house at that time won’t be a good idea, it’s worth skipping the house. Not every house on the market is going to be the right fit for every flipper, so don’t force yourself into properties that are outside of your usual scope.
Current vs Value
Value is a little bit different than cost. Instead of just looking at the raw numbers, you need to think about what this house flip can do for you. Will it put you on the map for being able to turnaround a new style of property? Will it bring in a low sales price but get done quickly? Try to figure out what the overall value of the property is before you make a purchase.
When looking at a home to flip, it’s vital that you think about how much the property will cost and where it is located. Once you’ve done that, you need to think about your ability to do the job and what kind of profit you can actually extract from the property. Once you’ve examined the angles, you can decide if a house is worth your time.
Anita Ginsberg is a freelance writer from Denver, CO. She studied at Colorado State University, and now writes articles about health, business, family and finance. A mother of two, she enjoys traveling with her family whenever she isn’t writing. You can follow her on Twitter @anitaginsburg
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