Today home flipping is probably the most popular strategy for making money in real estate investing. And it can indeed be a viable way to make a significant return on your investment, but there are also pitfalls to avoid and a fairly established procedure you should follow. The really good news is that you can make a decent profit flipping homes in almost any kind of market – as long as you take the right steps in the proper order. To help you get started in this popular area of real estate investing, here’s our beginner’s guide to flipping homes in Metro Detroit.
Do the Math First
The first step in the adventure of flipping homes in Metro Detroit is getting a handle on all the numbers. Before doing anything else, you need to carefully consider and fully understand the investing implications of the following: your purchase price range, the amount you can comfortably spend on rehab and repairs, your marketing budget and resources, and available funds to cover closing costs, insurance, and taxes. On the selling end, you’ll need to determine how long you can afford to keep the house on the market till you get your desired price and how much you can afford to reduce the price in order to sell quicker.
Be conservative with your numbers, especially in the beginning until you’re able to get a handle on what your typical numbers look like. If you’re handling the rehab yourself and hiring out contractors make sure you shop the job out to at least three qualified contractors to get a better idea on average cost of the job. When you’re looking at the ARV “After Repair Value” make sure you’re comparing the right properties. A good agent will make sure you’re using the correct ARV target when deciding on the deal.
Get Your Financing Squared Away
After you run the numbers and do all the math, you’ll need to get your financing squared away. For example, do you have enough capital to pay cash for the property, or will you need to get a mortgage? If you do need to finance at least part of the purchase price, you’ll need to figure your best borrowing option – for example, hard money or private money.
Choose Your Market Wisely
A critical consideration for flipping homes in Metro Detroit is the best market for your financial situation and investing needs. The area where the property is located will determine both purchase and sale price, desirability for buyers, and how much return you can realize on your investment. Typically, when flipping homes, you will put the property back on the market within 60 to 90 days of purchase. And the area often affects whether you can sell at your desired price and how quickly you can sell and realize an ROI more the specific property.
Start Hunting for Deals
Now, at this point, it’s time to start hunting for potential investment properties – especially those good deals that won’t require a ton of rehab money and will allow you to make a tidy profit. Your best bet here is to work with a local real estate agent who has experience with investment properties. You’ll need to generate plenty of leads and formulate a solid marketing plan. To find out how an agent can help you locate the kind of properties you need, call 248-330-4421.
Get Your Team Together
You will also need to assemble a team because there are too many varied tasks and pieces for you to do it all on your own and do it well. Paying a little extra for qualified professional help will ensure greater efficiency and most likely a quicker and better return on your investment. At the least, your team for flipping homes in Metro Detroit should include a real estate agent, an attorney, and a contractor who can hook you up with the various trade specialists in, for example, plumbing, painting, electrical work, and drywall. When it comes to flipping homes, time is indeed money, and your team can help you cut down on the time invested.
Rehab and Be Ready for Setbacks
Now, it’s time to get down to the actual rehabbing and repair work. The one principle to keep in mind at all times is that you shouldn’t invest more in the rehab than you can recover at sale time. Sometimes it’s better to invest less in the rehab and sell at a lower price in order to make more profit. The other thing to keep in mind is that you will always encounter setbacks, difficulties, and delays at this stage. So be sure to be prepared for these and allow time in your investment plan for them. Use them as learning and move forward.
List and Sell
The last step in flipping homes in Metro Detroit is listing and selling the property. Again, speed is paramount because the quicker you sell, the sooner you’ll get your investment-plus-profit back, and the sooner you can move on to the next flipping project. While there is some risk involved, flipping carries less risk than most other kind of real estate investing if you’re are able to sell and exit the property according to your plan. And a good agent can help you minimize that risk, especially in this last critical stage. Ready to get started flipping homes and making a profit? Just send us a message or give us a call today! 248-330-4421