3 Fundamentals of the House Flipping Market
If you’re following the current housing boom and the rapid increase in home prices, you may be considering the purchase of residential real estate specifically for the purpose of rehabbing and immediately selling. A fix-n-flip venture can be lucrative, but it’s important not to overlook the crucial elements of this industry. Thus, it’s vital that you do your research from the outset and be aware of the fundamentals of the trade that will benefit you starting out and down the road. Below we discuss some of the basic principles you should remember when considering the fix-n-flip business.
1. Surround Yourself With Experienced, Knowledgeable People
It may seem like obvious advice, but it’s critical to know and partner with experienced professionals who possess familiarity with the industry. Seek out and work with an experienced local realtor who knows the area and can guide you towards potentially very profitable listings that match your search criteria. You should also establish and build business relationships with multiple contractors. This ensures that you have contingent contractors to work with on each new fix-n-flip project should scheduling conflicts arise.
2. Stay Abreast of Market Trends
While partnering with an experienced realtor is important, especially as you’re starting out, it’s equally important to build your own professional and business knowledge of the industry so you can easily follow market trends. Understanding home values, materials pricing, and inventory locally and even regionally will help you target the location and timing of purchases, as well as those properties with the highest profit potential.
3. Don’t Expect Immediate Success
Reality TV has created the false assumption that getting rich from flipping homes is guaranteed from the start. Nothing could be further from the truth. While there is certainly an opportunity for a lucrative career in this space, early on you should plan for all manner of contingencies as you build up your experience and portfolio. This means having sufficient capital on hand, and access to industry subject matter expertise to navigate the unforeseen pitfalls. Prudent and realistic planning will minimize early frustration and get you on the path to profitability sooner than later.
Getting started in the fix-n-flip space can be both daunting and exciting. As you start out and grow your portfolio, keeping these fundamentals in mind will help you achieve your business goals much sooner.