Omaha-Council Bluffs most profitable home-flipping metro areas, says a new report ranking the area No. 16— up from its No. 28 spot last year but down from the No. 2 perch in 2013. Daren Blomquist, vice president of RealtyTrac, noted that the Omaha-Council Bluffs average gross return on investment for completed flips remained in the 55 percent range for the past five years.
It sounds easy to be a flipper or re-habber, doesn’t it? Buying existing homes, fixing them up and selling them at a profit, what could be easier? As residential real estate developers, we can tell you from experience that it is not easy. To be a home flipper (or redeveloper, as we prefer to call it) is more than just a new coat of paint. To get to the renovation itself, there is a lot of upfront work to be done, and don’t think you’ll get the first house you make an offer on. It may take ten, twenty, even thirty offers before you get your first contract.
Many houses you consider for rehab are in need of a total gut job, but you need to know your tolerance level. We are a member of the community and we know that rehabbing, if done right, is rewarding from a financial standpoint, but is also good for the community. No more drug houses with late night visitors and less crime in affected neighborhoods. You can be a part of that, if you do it right.
With that in mind, we scoured the web to find some of the best tips for success as a flipper:
Don’t overpay – Most real estate investors are familiar with the wisdom of Real estate investor Sal Vannutini who said “You make your profit when you buy. Work backwards to arrive at your offer price.”
Keep your emotions out of it – Don’t be horrified at the condition of the house or try to deliver more than the market demands. Don’t think of the house as yours. It’s not.
Be low key – When you make the purchase, start inside not outside. You may want to do a general cleanup of the outside by clearing away any junk. If nothing else you’ll make the neighbors happy.
Change the locks and secure doors and windows. Hang fabric over the windows.
Evaluate your handyman skills. Yes, you can save money if you have good skills, but if you are just average, it will show in the work and hurt your resale value and your reputation.
Start on the inside with the mechanicals. Fix any plumbing problems, upgrade wiring through the use of circuit breakers. Seal or replace the roof if water is leaking inside or the roof is just old. Everything should be evaluated in the inspection. Being blindsided by a roof, electrical or any major issue will cause you to blow your budget and, thus, lower your profit potential.
Estimate costs – Ron Guy suggests working from the same estimate form each time. Guy still has some contractors he uses all the time and if their bid is higher than his estimate, he presses them to find out why.
Pull the applicable permits – Not only is it professional, but pulling permits lowers risk and lowers liability. All buildings must be issued a building permit and a certificate of occupancy before it can be used. During construction, housing inspectors must inspect and pass/fail at key points. If you are buying a house that has been significantly remodeled, ask for proof of the permits involved before you purchase to avoid future liability for fines.
Move to the outside – Replace the roof if necessary, paint, and landscape. The one area of disagreement among rehabbers is “Being Low Key.” Some want to begin marketing with a sign out front from day one. Even though the house is not ready, a list can be made of potential buyers and given the opportunity, you can show properties you own or have rehabbed.
Styl Properties, Inc. is here to help homeowners out of any kind of distressed situation. As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.
Give us a call today at 402.909.0608 to let us know what YOU need help with!