Thursday, June 25, 2020 / by Sonya Reiselt
With interest rates at an all-time low and distressed home owners, it makes for an ideal combination for home flippers in Beaufort County. If you've been thinking about getting into house flipping, there's a few things to consider before you start.
Don’t expect to be in an out in a week
According to the recent ATTOM Data Solutions first-quarter 2020 U.S. Home Flipping Report, “Home flippers who sold homes in the first quarter of 2020 took an average of 174 days to complete a flip, up from an average of 169 in the fourth quarter of 2019 but down from 180 days in the first quarter of last year.”
How long it takes you to flip a home depends on many important factors. What is the condition of the home? How many repairs does it need & what are they? How experienced are you in making the repairs and how fast can you make them? Try to be realistic about the home you're looking at flipping. It's better to overestimate the time frame and allow for things like permits, inspections, and how long it will take to sell the home once it's ready. Keep in mind that you still need the 'bones' of the home to be in good shape. This includes electrical, plumbing, & HVAC. These items, if needing to be repaired or replaced, will add thousands of dollars of expenditures to your costs!
Also keep in mind that while you own the home, you have to pay for carrying costs, such as the utilities, financing, and taxes. The longer you take to flip it, the more you pay and the less profit you make.
Make sure you have enough money
According to Fit Small Business, “Costs vary based on where the home is located, property type, and the extent of the renovations needed, but the total cost to flip a house is usually around 10% of the purchase price.”
Just like the time frame it takes to flip your home, the amount of money you need to repair it will vary. Make sure that you have a contingency fund to cover anything that goes wrong.
Opening up an old home by tearing down a wall or two may sound like a great idea, but it could sink you. You need to make sure there aren't plumbing or electrical issues, or that you need to spend $10,000 on a support beam if you try to take down a load-bearing wall.
Consider bringing in a partner
If you don't have the cash or financing to flip a home on your own, you might want to look for a partner. They can finance the home and repairs, then you can split the profit, adjusting for anything your partner puts into the deal.
“Buying a home that just needs some cosmetic repairs and some TLC can drastically improve your return on investment,” said Lending Home. “New investors can learn as they go by starting with a home that just needs a little love, and work their way up to homes that need significant repairs.”
Learn some trades
If you plan to do all the work yourself, you should learn to do what's needed before you buy the home. Learning on the job will cut into your profits. The most successful house flippers are do-it-yourselfers who can install sinks, change countertops, and do basic electrical and plumbing jobs.
Put together a team in advance
If you’re planning to have others make the fixes, locate and hire them before you close escrow. Time is money.
Don't be impatient when it comes to buying a home to flip in Beaufort County. You may end up buying a home that costs too much in regards to profit margin once you flip it. Set a limit and stick to it. This is a business, not your personal forever home. You need to make a profit.
Keeping these tips in mind will help you to make your home flipping adventure more successful. Flipping homes is hard work, but it can certainly pay off if you do it right.
Looking to buy a home in Beaufort County? Visit our home search feature to find the perfect home for sale. Visit our blog every week for more helpful real estate advice, along with local articles about life in the Lowcountry.