It seems that you can hardly turn on the television right now without encountering programming that delves into home improvement projects. Shows are on around the clock offering ideas for decorating tips, basic plumbing and carpentry, room re-configurations or landscaping projects.
One particularly popular genre is house flipping: taking a property that has fallen into disrepair and performing the labour necessary to “flip it” into a desirable property that you can sell for more than the construction expenses.
This is a process that a lot of shows portray as a quick and easy way to make money thanks to the magic of editing and time-lapse photography. It’s easy to see why this appeals to so many people, particularly rental property owners. Before you buy that not-so-perfect fixer-upper, there are a few basics you need to know about entering the world of house flipping.
Be smart about potential partners
This goes for several types of partners. If you want to have business partners, make sure that they’re people you trust absolutely. You will not only be working with money but with time, so make sure your partners respect both. It can be a tantalizing idea to get into this business with friends or family, but sometimes they might not be the right mix for what you need in an actual business partner. Consider all of their traits and ask yourself if relationships would be damaged if things were to somehow not go according to plan.
This commitment to trust extends to any tradespeople that you employ, from landscapers to carpenters to plumbers. You want to do your homework and mine your network to find people who are trustworthy and reliable. Entire projects can be put on hold in a worst-case scenario where someone does not deliver as originally planned. Doing your homework can avoid these types of situations, so ensure that you’re doing your due diligence.
Consider why you’re flipping a building
Some choose to flip a house for professional development reasons. They want to know how to become better tradespeople or landlords by figuring out how to handle many different home repair scenarios all at once.
Most people get into flipping for the money. The profit margins can be very high on a job done well, on schedule and under budget. If money is your guide, you need to know how to manage a project, especially a multi-faceted one like home construction.
Costs can add up quickly as timelines expand since it usually means you’re making more mortgage payments that can quickly bite into your profit margins. However, the flip side of that is that if you’re rushing a project to get the property done and onto the market, you’re running the risk of doing shoddy work that won’t pass fool discerning home buyers. You might wind up hanging on to the property for longer than you had intended.
Location, location, location
You can sometimes be drawn in for a great deal in a neighbourhood where home sales have not always been brisk, such as a remote property that might only appeal to a small subset of Canadian buyers. You might be concerned that you can’t afford a more desirable neighbourhood, but you should know that any additional funds upfront will likely pay dividends when it comes time to sell the house.
You’re not doing yourself any favours by flipping a house that will be virtually impossible to sell, so make sure that you do your research and homework when exploring where neighbourhoods have had good activity on the market. This will help push the possibility that you can quickly and easily sell the house when it’s time to reap the benefits of all of your hard work.
Keep things in perspective
Many people go into house flipping with rose-coloured glasses. To an extent, this can be an advantage – you’re allowing yourself the optimism and spirit to get a difficult project done. It’s important to have faith in yourself and your process, so a good attitude is crucial to any job like this.
However, this type of optimism can be too much of a good thing at times. You want to make sure that you go into a house flipping project with your eyes wide open. Construction projects can wreak havoc on timelines and budgets, and there are delays that you might never have anticipated. If all of the electricians in your area are booked up for weeks, your rewiring project could take longer than you had expected.
These things happen and they are not causing anger or frustration – just realism. The hiccups you’ll experience in home flipping are unlike those in other industries, so just know that you should budget for them and keep your head down whenever they arise (and they will).
Do the homework
If you need to know one think about house flipping, it’s that you must try to understand what you’re getting yourself. If you want to put in oak floors but have no idea how much oak costs, then you’re doing yourself a great disservice that will have repercussions on your bottom line and your morale. You want to make sure you’re thinking of everything that is required ahead of time, from building codes to recommended tradespeople to material selection. All of these will help you navigate the challenges that come up with any home improvement project, much less a house flipping job.
House flipping can be an enjoyable and beneficial endeavour for many people. Most importantly for investors, it can be profitable. Make sure that you head into any project with your eyes wide open. Do the necessary research ahead of time, talk to people who have experience and above all make sure that you trust your instincts when tackling a new endeavour.