Experts predict that the 2022 real estate market in the US will reach over $1.73 trillion.
It’s easy to see why you want a share of this market and house flipping is a lucrative way to get your fingers in the pie. But you need to do it right, and that can be daunting if you’re new or branching out into the house flipping world.
Don’t worry, we can help! Keep reading for our ultimate house flipping checklist to get you off to the right start.
Set Your Budget and Stick to It
The first tip on our checklist for flipping houses is to know your budget and stick to it. You shouldn’t even start looking for properties without this budget in place.
Your budget should include every aspect like:
- Closing costs
- Inspection and surveys
- A buffer to protect you
You don’t want to end up in a position where you’ve drained all your funds. It’s impossible to know how long it’ll take to sell a house, so don’t stretch your finances too thin. It’s also important to make sure flipping houses is the right investment for you.
Get Preapproval or Have Cash Ready
If you plan on swooping in with a cash offer, make sure the money is ready to go. If you’re financing a flip house, then you’ll want to shop for lenders first and get preapproved.
A preapproval makes you seem like a safer bet for sellers. It could be the deciding factor if a bidding war starts that wins it in your favor. You should expect a bidding war, as it’s common with low-price potential flippers.
Research the Local Market You Want to Invest In
For flipping projects, it’s a good idea to choose up-and-coming neighborhoods. You want somewhere with increasing amenities and jobs so make sure you do your research.
Are the property values strong and holding? Where are the best schools? Are shopping and entertainment spaces close by? What are the local property trends; these are some questions to analyze.
Talk to an Agent and Compare Sales
Once you find a property you think is interesting, pull up similar recent sales in the area. At the current asking price, is there room for a profit? Can you modernize the home and make the necessary changes?
It’s a good idea to call a local agent and ask for a quick assessment from them. They’ll know the local market far better than you can learn in a few days or weeks. Ask them if they think it would be marketable once you renovate.
You should also ask how long they think it would take for you to do the necessary work and how the prices are in the area. Is it a volatile market or are prices staying stable? It’s their job to be on top of the local market, so make use of their knowledge.
Look Into Buyer Trends
When looking at house flipping, you need to go further and understand the buyers too. What are local buyers looking for in houses? What are the most popular amenities and features and which ones aren’t desirable?
If you want to end up with a marketable home after renovations, this is vital information. Otherwise, you could waste money on projects buyers don’t care about and ignore ones that they do. This will have a huge impact on your ROI.
Do a Home Inspection
This is especially key for flipping houses because you’re buying to sell for profit. You’ll want to call in a professional inspector to look for things like:
- Sewage systems
- Structural issues
There is a lot of money on the line, so be thorough. This will give you the best chance of avoiding any nasty, costly issues cropping up after you’ve paid up.
Stick to the 70% Rule
If you want to make money when flipping a house, you need to stick to the 70% rule. This means you don’t spend more than 70% of the property after repair value (minus any repair costs).
This is one of the most important tips for any house flipping guide and the best way to set yourself up for a good ROI after selling. If the home you’re considering doesn’t fall into that 70% rule, then negotiate.
There is no harm in asking, and consider what else you can offer the seller to sweeten the deal. Many sellers would drop their price if it meant avoiding a length closing process.
Plan Your Renovations Early
As soon as you put an offer in, start to plan out the renovations you’ll do. What repairs need immediate attention, make sure you have someone on standby to get in as soon as you can. You want to avoid any damage getting worse.
Then pin down the other projects you want to achieve and set deadlines for each one. The more comprehensive your plans are, the easier it’ll be to get quotes from contractors. So make sure you know what you want to achieve before you start building your team.
Put Your Team Together Before Closing
Once you have your project plans put together you can build up your team. Get bids from 3-4 contractors and check their licensing, insurance, and reviews. You can do this online via Google or websites like the Better Business Bureau.
Also, ask them for testimonials from past clients and see if you can speak with any of them yourself. Once you’ve got your team together, then hammer out the timelines in your plan. Set up payments schedules and all the other details to keep things on track.
Turn On the Utilities as Soon as Possible
Right before you close, make sure you get all the utilities set up and turned on when you get the keys. While you’re there, set up autopay for those bills, it’s easy to lose track when you’re flipping.
It also avoids the need to stop by the mailbox to pick up the bills all the time. Autopay also helps protect you against costly late fees. The utilities also won’t get shut off in the utilities getting cut off in the middle of renovating.
Order the Materials, Portable Toilet and Dumpster
Your contractors can’t get started without the right materials and necessities. So, make sure they’re in place ready for the starting date of renovations.
This should include things like a dumpster for rubbish and waste and a toilet facility. Any time your team has to go off-site, this will only cause delays to the work, and delays to flipping the house.
File For Your Permits Right Away
Permits are one of the biggest hurdles you’d face when flipping houses, so get on these ASAP. Many types of renovations need permits and also demolition work too. It’s best to ask your city hall what’s required and file for these permits right away.
This is where having an experienced contractor will come in handy. They’ll have done projects like yours before, and will know the permit procedures. Let them help you navigate this, as it’s likely they’ll even know the exact permits you need and where you get them.
Check-In and Remain Visible
If you have a professional team handling most of your projects, make sure you’re there at the site. Keeping a consistent presence onsite is the only way you’ll know how your project is going and if it’s on track.
Make sure you drop in at least a few times a week and schedule regular meetings with your contractors. This way, if any issues or delays crop up, you’ll be in the loop right away and can tax quick measures to fix them.
Pick the Listing Agent and Keep Them in the Loop
If you haven’t picked one already, make sure you choose the real estate agent who will list your property. You should then keep them updated on the progress of the renovation and its timeline.
This way, you can make plans on how you will stage, market, and promote the house in good time. If you want to sell your home fast and for the biggest profit, it’s important that you list it as soon as it’s ready.
Do a Final Walk-Through
As you’re getting close to completing the renovations, schedule a walk-through. Your contractors and your real estate agent should be there for this and make note of what’s left to finish. You also want to take this chance to make sure everything is as you want it to be.
There should be a priority list of items that need doing before you can list. Give a deadline for these items agreed by you all, and schedule a follow-up to make sure the deadline’s met. Communication is key here, and make sure everyone is on the same page to keep the project on track.
Complete the Staging
Since this home is likely vacant, you should spend time staging it before you put it on the market. This is important as it could boost the value of the property by up to 10%.
You don’t have to do every room, consult with your agent who can guide you on the best ones to do. Usually, you want to focus on the living room, kitchen, and master bedroom as the most important areas.
Clean the Property
Renovations come with their fair share of dust and debris, so call in a professional cleaner. This is especially important for properties that needed extensive work.
Ask them to pay close attention to floors, backsplashes, grouting, and bathrooms. These might seem like small things, but buyers will notice them as they walk around. It can be a huge turn-off.
Make Sure the Photos Are High-Quality
Ask your agent to refer you to a great photographer with experience in real estate. If you can find one that will add a video tour, that’s even better as is an interactive floor plan.
If you’re in a hot seller’s market it’s not uncommon to get offers that are sight-unseen. Buyers will go off the pictures you provide so they might be the only thing they see. Make sure you stand out.
Get the Pricing Right
When flipping a house getting the price right is crucial. You want a price that falls in line with similar homes in the neighborhood. At the same time, it still needs to be a price that makes you a profit.
This can be a tight line to walk, and it’s where your real estate agent will be most useful. If you price your home too high, this could leave it stagnating on the market.
In turn, this leads to more mortgage bills, utilities, and insurance costs too. Buyers could think there is something wrong with the home too, and avoid it even if you drop the price.
Set Up a Lockbox
If your property has a lot of viewings, you can’t expect to be there every time. You then don’t want to turn down potential buyers because of your busy lifestyle.
This is where you can work with your estate agent and install a lockbox on the property. Your agent can then have access to the property and set up viewings when convenient to the buyer.
Prepare to Negotiate
Like you negotiate when you bought the home, expect buyers to negotiate with you too. Do the math and work out what the lowest price would be you’re prepared to accept to make a profit.
You should also decide on which concessions you’re willing to make. Will you pay a part of the closing costs? What about making repairs if the inspection throws up any issues?
Knowing how far you’re willing to budge will help the process move faster. There is less indecision so you can reject or accept and offer faster.
In the spirit of speeding things up, make sure you pick a pre-approved buyer with a strong deposit. Otherwise, you could find their mortgage application rejected which will cause you delays.
Don’t Flip Without a House Flipping Checklist
A house flipping checklist is vital for success flipping houses. It provides a guide on the steps you need to take from starting out to completing the sale.
Make sure you do your research right from the start and surround yourself with a strong team. Plan ahead, make the right preparations, and stay organized. This is the best way to ensure success in your next house flipping venture.
If you want to take the plunge and are looking for finance, get a quote today. At LendSimpli we provide a competitive, personalized lending experience you can rely on.