Flipping real estate has become a popular trend for investors across the country. However, not every flip goes to plan. In our latest post, we share 7 tips for a successful flip in Chicago!
Many people see the shows or hear stories from friends about people they know who flip homes for profit. However, with more competition than ever for these fix and flip homes, you will need to know what you are getting into first. By planning ahead, you can save yourself a lot of trouble down the road.
Tip #1: Start Saving Now
Loans for high-risk properties in Chicago can be challenging to get. Most fixer-upper properties will be highly sought after by cash buyers. For sellers with a run-down house, cash talks! Your offer will have to be competitive both in price and your ability to close quickly on the house. In addition to cash for the sale of the house, you will also need capital for improvements and all the unexpected costs that arise. A good rule is to always pad your rehab budget by 10-15% to make sure you’re covered.
Tip #2: Educate Yourself
Before buying the first fixer-upper you see, there are lots of things you should learn about the property and the local market. You should take a good look at future development plans for the area, market trends, the different property types available close by. What’s selling and what’s not, average days until closed and so on. Make sure you have as much knowledge under your belt as possible so you make a smart decision about your property investment.
Tip #3: Find A Mentor
There is nothing that beats experience. Finding someone who has done it before and has had success, should be at the top of your list. If you have never flipped a home before, offer to work for someone who knows the ropes. Many successful flippers and investors love nothing more than sharing their tricks and tips for the people getting into the business behind them. Learning the ropes from a professional can prove to be invaluable.
Tip #4: Build a Team
There are many different professionals ultimately involved in the sale of a house. You will want to work with people you can trust and have built relationships with. You should find a great agent who can give you insight into the market when needed and possibly help you sell when the time comes. A great contractor who you can trust to make accurate estimates and be able to finish the job on time. You will want a title company who can move the process along quickly when it is time to sell.
Tip #5: Fix The Right Things
Many people will flip a house and spend too much time and money on the wrong things. The items you fix up should immediately bring value to the home. If the kitchen is older, but still in great shape, you aren’t going to see a huge return if you decide to gut and modernize it. It wouldn’t be worth the hassle or time.
Tip # 6: Time Is Of The Essence
Time is NOT on your side. Every day that you own the property, it is costing you money. From utility payments to property taxes to insurance to the loan payment. A good flipper knows that they need to sell the house as quickly as possible.
Tip #7: Don’t Get Attached
It’s an investment designed to sell quickly. Keep in mind, you aren’t ever going to live there. Many people get hung up on aesthetics or other details of the home. This can cost time and money. The idea is to add value to the house, and resell it quickly. Treat the entire process as a business and don’t get too attached to any property you buy.