Flipping real estate can seem very daunting. However, by following the proper tips when starting the process, you can avoid making some commonly known mistakes and increase your chances of completing a successful flip. The key is to make sure you educate yourself on the process and do your research before beginning. 

 Location Matters

Where you buy always matters. Your goal as a flipper is to force the most amount of appreciation while renovating your property. When selling residential properties, the value of the home is based on neighborhood comparables. If you are buying in a rough part of town with lower house prices, then you will be limited to the comps in that localized area. All real estate is local. Search out nicer neighborhoods with good school districts and transportation where homebuyers may be more likely to want to live. Focus on purchasing homes in A or B neighborhoods that are in the worst shape compared to the neighboring homes. You are more likely to hit the price target you need to make the flip profitable. 

Buy Below Market Value

In real estate, it’s not when you sell the property that you make your money but when you buy. If you overpay for a property, no amount of forced appreciation will help you turn a big profit. When hunting for deals, the traditional rule to follow is the 70% rule. The rule states that an investor should not pay more than 70% of the after repair value when working a deal. If you have never flipped a home before, you must consider the other factors such as expenses and holding time cost that can chip into your profit. Do your research first in a target market or neighborhood understanding fully what the comps are and then aim for 70% of the after repair value as a good rule of thumb. 

Focus On Improvements Where It Matters

The common mistake first time home flippers make is that they forget they are renovating an investment property and not their own. Do not try and use the best of the best material or style it which best suits your needs. You need to use good material that’s efficient and cost-effective while going with a design that would appeal to your target buyer. Also, if you are on a budget, focus on the key areas of the home. Kitchens and bathrooms are always a great place to start and will improve the overall value of the home. Most homebuyers do look at these spaces as an indication of the value of the home. 

Next Steps

Now that you have three tips to start flipping properties, you should now continue your research and commit your time to read books and watch videos on how to properly flip homes. We recommend you spend some time reading “Finding Your Real Success” and watching informative videos on the Real Success YouTube channel. The best thing you can do is find a mentor and with our mentor program, we would be more than happy to pair you up with the right coach. Join us at Real Success and interview seasoned investors to help shorten your learning curve. By educating yourself and applying proper action, you will be well on your way to flipping your first investment.