Things to Consider When Purchasing Properties to Flip:

Investing in Real Estate

Novice investors looking to flip real estate, often do not realize the unseen costs involved or what to look for in potential properties. Do your homework before purchasing!

Costs: 
Obviously labor and materials
*Property taxes, insurance
*Utilities

*Permits

*Mortgage payments 

*Staging

*Real estate agent fees

*Transfer taxes and closing costs (differ according to state)

*Capital gains on your profit
Remember the time it takes you to complete a project directly correlates to your bottom line. 

What to look for in a Property:

*The ugly duckling in an established or up and coming neighborhood OR

Look for a home in the neighborhood that has yet to be discovered - is it near public transportation? Close to an up and coming neighborhood? Close to great shops and restaurants? Do your research. Look up the sales price of properties (within the last 6 months) in the neighborhoods to determine what homes are selling for in the area.

*Nice lot

*Extras (something unusual, like a garage in an area with few garages)

*Good bones - you can take off ugly enclosed porches, but it is often expensive to make windows larger or move a poorly placed exterior door. Additions are rarely a good idea. Look for a home with attractive permanent/semi-permanent features

*Smaller homes are usually cheaper to repair. While the sales price will be less, so will your costs and your pool of buyers will often be larger.

Some things I avoid (these have worked for me but you will need to decide what risks you are not comfortable taking):

*Water issues

*Foundation issues

*Title issues - it may take a lot of time to sort out, time that your money will be tied up

Always keep in mind flipping homes is about the margin. Sometimes it is better to clean it up, paint, and resale. Other times it maybe worth gutting and doing a full renovation. However, unless you are in the $1 million + flipping world avoid high end finishes and materials - a nice Best Buy stainless steel stove will bring the same sales price as a Viking in most properties. Opening up floors plans, great paint colors, and creative design details are usually what increases prices and brings in the buyers.

Since a property does not always need to be fully renovated (think hoarding situations and estate sales), the rules I follow are...

Always...

Wash the windows and Have the property cleaned

and

Almost always...

Paint, Have the floors refinished and Stage