How to Flip a House: Are You Cut Out for This Remodeling Feat?

For two years, I worked with a high school friend who has made thousands flipping houses in my area. The real estate industry can be up and down, you just need to learn how to work it in your favor. Keep in mind, when flipping, you are not just investor or designer; you're also accountant, foreman, real estate agent and designer.

A lot of people try to flip, but few of them will survive to flip again. There's a lot you need to take into consideration before getting into the world of real estate.

Know your market and watch it carefully. The real estate market is a constantly fluctuating thing. You should buy when the market is on your side, get in, remodel fast and get out just as quickly.

When looking for a house to flip, you want a diamond in the rough. Something you don't have to do a lot of work to. Maybe fresh paint, a new roof, a new yard, those types of things. The idea behind flipping for a profit is that you get in, spend the least amount possible and sell for a profit.

You can buy these types of homes at auctions, but be careful. Normally, you don't get to inspect the homes that are sold this way. You just get to do a drive by, which doesn't tell you what types of structural problems the house may have.

Once you have chosen a home, get the most detailed home inspection you can. You want to know about as many of the problems as possible before buying. It will also help you begin planning the remodel.

Price other homes in the neighborhood. You need to know what other houses are selling for so that you have an idea if the market can withstand the price you want. For example, if purchase the house for $50,000, put $25,000 into it, and plan to sell it for $150,000, you need to know if there are homes in the area that are selling for $150,000. If the houses top out at $75,000, you need to know ahead of time.

So, you have now chosen a home, purchased that home and now need to get your plan moving. Set up a budget for every project you intend to do and stick with it. Nothing will kill a flip faster than a budget that isn't strictly adhered to.

When you have your budget all planned out, add another 25% to it. This is for all of the incidentals that will come up. They come up in any project, so it's best to plan for them as much as you can.

Set up a timeline for the entire project. It will make it easier to plan out when to schedule different contractors and home inspections. It will also help you judge if the project is falling behind.

Decide how much of the work you can do yourself and how much will have to be done by outside contractors. This is always difficult because you want to do everything you can yourself. But, you also need to be realistic about your own skills and the time frame. Don't attempt to do anything you don't already know how to do, like rewiring. It will just make it take longer when you're learning on the job.

Be realistic about how you remodel and what you upgrade. If the home is in a low-income area, you don't need to put in granite slab counter tops and hardwood floors. You want to make the house look nice while staying within what the market will support. This is where knowing the area can help immensely.

The more work that is done by contractors, the faster your project will move along. These people are professional and don't want to be there longer than absolutely necessary. Hiring a contractor can be a bit expensive, but it can mean the difference between making your deadline and blowing it.

Schedule your contractors and sub contractors around each other. You don't want a bunch of them in the house tripping over each other. And a lot of contractors can be booked up for weeks. This can be a juggling act, but if you stay on top of things, you can do it without any major problems.

The best way to find a good contractor is to ask around. You need to find a contractor that has a reputation for doing good work fast. People will tell where they got great work done and they will also let you know who to stay away from. Finding the right contractor can make all the difference to your project.

When you start to remodel, working from the top down is the best way to do it. On the outside, start with fixing any problems with the roof and move down. On the inside, start with the ceilings, then the walls, and then flooring. You won't always be able to do things in that manner, but it's best to try as hard as possible.

After the project has started, you need to constantly be checking in with the contractors on the work site. If you are there or your representative is there, there is less chance that your contractors will be goofing off on the site. And you will also be able to address any problems that arise as quickly as possible.

At the job site, post lists of what needs to be done. Put everything on the list, you don't want something minor to get overlooked. Nothing feels better than being able to check things off the list and watch it get smaller. And it's the perfect way to make sure the project is moving along at an acceptable pace.

Make sure you have adequate insurance coverage for the home and workers. Explain to the insurance company what you're doing exactly. It will make your insurance a little more expensive, but it will be more than worth it if there's an accident at the house. You don't want to be sued to cover someone's medical bills.

Have the building inspector out to the house as quickly as possible. These guys can make or break a project. The faster your inspections are done, the more time you have to correct any potential problems.

While remodeling, do not let any piece of paper get thrown away. One piece might not seem significant now, but it will be when you're trying to balance the books or return extra materials. Even after the house is sold, it is a good idea to keep all receipts and such for at least 6 months after the sale. You don't want to be searching around for anything, keep it organized.

Make sure you design the house to be neutral and don't make it reflect your own tastes. Just because you like the bright orange doesn't mean your buyers will. Keep floors and walls in neutral, light colors, the walls can even be left white. You want potential buyers to look around the house and be able to picture their belongings there. They need to be able to see the house fitting to their own tastes.

When all construction is completed, you need to decide on a price for your flip. Do the bookwork and see how much you have spent. For the quickest turnover, you need to stay within what other homes are selling for in the area. Realistically, unless you purchased the home for an extremely low price, you can expect to have a profit of around $20 to 50,000.

Flipping houses can make you rich, but more often it'll just give you a nice profit. Anything can happen when you are flipping. The market could take a nosedive and take your profits with it. Your house could spend months for sale and never sell. You need to just be happy with whatever profit you can get.

After 2 years of being an assistant project manager, I left the real estate industry. For me it was just too risky and I saw too many people loose their shirts. I'm not saying flipping is a bad thing, just that you never can count on anything.

If you decide to begin flipping, go into it with your eyes wide open and be prepared for anything.