In 2020, the median gross profit of a flipped house was $66,300 in the United States. The national median household income in that same year was only about $10,000 more, meaning that house flipping can be an extremely lucrative business. As is the case with any industry, there are ways to make that potential profit even greater, and this article will take a look at 4 house flipping tips teams use to maximize their profits.
House Flipping Tips on How to Maximize Your Profits
When you are investing in a house, chances are high that it will need some work before the process is complete. Whether this includes new paint or kitchen renovations; these changes can lead to higher profits for your flipping project as well as increased value of your property when all said and done. Check out our tips on how to maximize flips from start to finish!
House Flipping Tip 1: Avoid Typical Listings
The first step in maximizing profits is minimizing expenses, and typical home listings and real estate websites are trying to sell to families and individuals who want to move into a liveable house. With that, many of the amenities that you’d add to increase value in a flip are already installed in the house meaning it will sell for a higher price to you, and not have as much room for improvement (the flip), causing the difference in purchase and sale price to be smaller as well.
The better places to search for flippable houses are areas of town that have lower housing costs, in general, and then focus on things like auctions and foreclosures where the homes are being sold because the owners (or the bank) need money in their pockets, not money to spend on upgrades to their homes. These homes that get sold out of necessity tend to have the greatest potential to increase value after investing in some modern touches and doing a lot of things realtors would have done at a much higher cost to a potential purchaser.
House Flipping Tip 2: Start “Building” Relationships with Contractors Now
Contractors love house flippers, because, unlike a typical homeowner who may occasionally and sporadically need work done, house flippers’ incomes depend on how many houses they can buy and sell, and that means steady work for contractors. Websites like Yelp can help start your search, but many individuals who are appealing for long-term work tend to have a more local profile than an online presence. Ask around in your potential purchasing neighborhoods and let people you know in the construction business hear about your ideas for house flipping. Finding a trusted team of contractors who you can depend on means less time searching for workers, and generally, a guarantee of ongoing work (i.e. multiple houses) can get you some hefty discounts, ultimately helping to maximize profits.
House Flipping Tip 3: Don’t Act Like You Need Every House
When you find a house you think you can make a lot of money on, don’t act like it when discussing prices. Most sellers will know you’re a flipper unless it’s one of your first purchases, so play that card and let them know you have plenty of other places you’re looking at. They could wait around for a purchaser planning to move in who is probably willing to sell a little more, but at auctions and wholesale places, simply making a sell is what most aim to do. Once you’ve researched the property, it’s good to make a thought-out estimate on how much you’d be able to sell it for, and think backward to decide how much you’d be willing to buy it for, and then stick to your proverbial guns.
House Flipping Tip 4: Keep Your Head Small
Even if you’re a veteran of house flipping, there will always be new issues with every new house. Ordinances, failed points of inspection, poor heating, poor plumbing, etc. are just a few examples of things that will go wrong when flipping houses. Though there are plenty of things that can, indeed, be done yourself, its important to know when to invest in professional help. Electrical and plumbing, especially, can result in hefty lawsuits if done incorrectly, so be sure to take a deep breath before embarking on any DIY projects in your flipped house, because the money you may save on hiring a professional can wind up being minuscule compared to being forced to fix something in a short amount of time if one of your DIY projects proves faulty in the eyes of a purchaser. Also, that purchaser may ask for a history of work on the house, and a written record of professional work makes for a better selling point than “I fixed these things!”
House Flipping Tip 5: Always Be Learning
Flipping houses can actually be fun, in addition to lucrative, especially if you’re invested mentally in the process. There is always something to learn, and even though these tips are for large-scale saving, there are financial corners that are safe to cut in almost every phase of house flipping. Learn every day, and you can maximize more and more profits with each and every house you flip.
A Final Take On House Flipping Tips To Maximize Your House Flipping Profits
We hope this article has provided you with a few new ideas and tips to help maximize your house flipping profits. If you are interested in learning more about the nuances of House Flipping, our course is designed for beginners who want to learn how to get started quickly or those that have been doing it for years but would like some helpful advice on maximizing their success. You can always reach out if you need any additional information as well!