Anyone wholesaling property will want to keep their costs down and profits high. In the business it's all about staying within your house flipping budget and the final selling price of the home. So, with the aims of keeping you, the real estate investor, within budget here are several tips towards success.
Don't Buy a House with Mold
The average homeowner deeply afraid of possible black mold in a home. Plus, it's really hard to get out of a home once it shows up, meaning more time and expense. Mold is a deal breaker.
Reconsider buying any home that has mold in it. It may not be worth the effort.
Make Realistic Improvements
Many investors make the mistake of going overboard in their improvements. They don't take into account the actual selling price of homes and so invest way more money than needed in a property. This could result in you taking a loss even if the home sells.
For instance, there is no need for you to add a miniature water feature if no other homes in the surrounding neighborhood have miniature water features in the backyard. It increases the price but also requires a lot of care. Water features really only appeal to a certain select group of homeowners.
Double Your Estimated Budget
You should always double your estimate for fixing up a property. When figuring how much you think you can offer to buy a property and still come away with a profit, this is always something to keep in mind.
Even the most accurate cost of repairs estimate can change over the course of the rehab the final price. You automatically create a buffer zone for your house flipping budget when you double your estimates. Its just more profits for you if you come in under that amount.
Buy Homes that Only Need Cosmetic Repairs
You'll want to seek out wholesaling property that is in need of low cost or easy to do cosmetic repairs. Look at things like yard work and a good coat of paint. These are the kinds of repairs that a homeowner doesn't want to do themselves, but they can greatly increase or decrease the value of a property.
Buy the Right Home
You may be so eager to get into wholesaling property that you buy the first cheap house you can find. It's about more than just buying a cheap home. It's about finding the right house to flip. As mentioned above, look at homes that are structurally sound, but have unsightly cosmetic problems. It won't cost you a lot of money to invest in and fix up that property and you'll still be able to sell it for a great profit.
In addition, make sure you get a home inspection of the property you'll be signing papers on. A home inspection will confirm that a property is structurally sound or that it's not.
Rehabbing Takes Time
Rehabbing takes time and can really ruin your house flipping budget. Most contractors have multiple jobs going on at once or backlogged. You can't just pick a contractor out of the yellow pages one day he or she may not be able to get to work on your house for a few days or weeks, maybe even months. If you have a property that will need major repairs or are running short on funds for carrying costs, you should keep this in mind. It may be better once you get low on funds to just cut your losses and sell the property, 'as is'.
You can keep within that house flipping budget when wholesaling or house flipping. You just need to keep a few things in mind. Plus, it never hurts to double your budget and work within that framework.
Colin Egbert is an experienced Real Estate Investor with plenty of short sale techniques to aid fellow investors in their quest to succeed and make huge profits. He's the author of the ebook "Getting Started with Short Sales" providing the tools needed to start your own real estate investing business. Colin is also the CEO of Realestateinvestor.com a website dedicated to helping investors make the most of their business.
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