- Decide WHY you are doing this Flip. Is this a fun hobby? Are you doing this to turn a profit, if so, what is your timeline? Are you going to rent out the space? Is your goal to live in the property, and sell eventually?
- Define the Big Picture. You have already decided why you are doing this, now tell me WHO is your perfect buyer? Another way of asking this question is, who is your Target Market? Do some research and write down exactly who you see buying this property or renting as a profitable tenant. I want to know what they eat for breakfast.
- Work with a Real Estate Agent to find your property. As the buyer you do not pay any commission on the purchase of your flip. Agents are knowledgeable in the areas where they work and will be able to assist in the purchasing process.
- Location, location, location. Old phase but still true today. If you are living on an island and planning to rent out a vacation flip, then buy as close to the water as you can. If your flip is to be in a residential area, consider the following: schools, medical facilities, hospitals, major highways, markets, and proximity to commercial space for those buyers who might be commuting to work.
- Finance, another f word (fun, and freedom being the others). I joke only because I want you to understand how important cash flow is to the success of your Flippin’ project. Cash flow is king for any project. Cash flow is king for any project. Cash flow is king for any project. How will you finance this baby? How will you pay for the property itself and, also, the upgrades necessary for your flip? Decide what financial options are open to you and how you will go about putting them in place.
- Scope of Work. As you begin to view different possible Flippin’ properties take a notebook with you and jot down all the areas that need repair or upgrades. Take photos to jog your memory later. Unless you are planning to live in a flip forever, look for properties that need simple upgrades. You want a home that has good bones but needs a face lift. BEFORE you purchase, download a DIY remodeling template to help you determine your Flippin’ costs.
- Budget. Knocking out walls, replacing roofs, rewiring or replumbing a property; these are major expenses and will not only increase the costs of your project but also your timeline for finishing up the project. Why do I care about the timeline? Because the longer you financially carry a loan on the property, the greater your costs. Your goal is to turn this flip around as quickly as you can. Use the template that you downloaded to determine a budget for every room of your flip. Is your budget doable? If not, it’s back to your Scope of Work and determine if you can cut out some upgrades or is it time to look for another property?
- To DIY or not to DIY. This is a big question.
- Here is my opinion and of course you must follow your gut and decide what is best for you. When I first started flipping houses, I had no idea what I was doing. I just had this great idea. I purchased two homes in the Sacramento, CA area, one to live in and the other to flip. Of course, the “flipper” was the larger of the two homes, a 4,000-sf home, 4 bedrooms and 4 baths with a pool and in need of some landscaping.
- Luckily at that time I was in the Environmental Design program at UC Davis, so I was getting some training on design, but nothing on finance, project management, dealing with sub-contractors, or marketing the final product. At least I had the foresight to know that I didn’t know. So, I looked at hiring a contractor as a way to find a mentor or as a way to become his apprentice, unbeknownst to him.
- I did the design work, but the contractor hired the subs, scheduled the work to be done, and ordered all the materials to be used. I showed up every day on the job site after I dropped the boys off at school and became his shadow and the “Gopher Du Jour.” Much of what I know today of project management came from this experience. Was it more expensive to hire a contractor? At the beginning, yes. But in time I later became my own contractor as an owner/builder.
- You really have to decide for yourself how skilled you are at construction or if you would rather put your talents to work in other areas of Flipping.
New Telephone Number: ____________________________________________
New Address: _____________________________________________________
Before you move, you should contact the following companies and service providers:
______Internal Revenue Service
______Health and Fitness
______Finance Companies/Credit Cards
______House of Worship