SHOULD YOU START FLIPPING HOMES?
To Flip or Not to Flip
When you watch TV programs on productions like Flipping Vegas or the like, the process seems relatively fun and profitable. The truth is, it is neither unless you know what you’re getting into.
At Shelly Walters Realty Group, we flip a few homes a year in central Indiana… and we have come to learn some pretty important lessons. Flipping Indianapolis properties is a major endeavor when you consider everything that is involved. We are going to hit some of those points in this blog, so let’s get into it.
Are you in the right financial situation to flip?
To make a flip profitable you need to have your financial ducks in a row. This extends far past having the right mortgage on the property. It even goes beyond having the right kind of cash flow to do the renovations needed to get a return in your investment.
You need to have the financial capacity to handle major unforeseen problems at the home… all the way to the close of your property at the title company. Be sure to do plenty of research on flipping successfully before jumping into this pool. Find the right realtor and especially those with flipping experience. As always, we would be happy to help.
Do you have construction skills or will you hire it out?
Now is the time to consider if your skillset is right for flipping. A few DIY projects at home don’t qualify as the right skills. Don’t get us wrong… you can acquire any skill but consider that time is money in flipping and you’ll pay a heavy price tag to learn these skills in the middle of a flip.
If you don’t have the skillset… do you know the right people to hire? Have you made high-quality connections with plumbers, electricians, inspectors, drywall gurus, landscapers, painters, and the like? This doesn’t mean you’re friends with these folks on Facebook. This means you have established a rapport with these individuals and trust them. If you haven’t, make those connections now and not when you’ve acquired a property. Again, this will take time and that is one thing you’re very short on in flipping.
Do you have the time to dedicate to flipping?
Time is deceiving in flipping, after all, the whole point is to flip fast and risk as few dollars as possible on the factor of time. In order to flip a Carmel home quickly, however, you’re going to need plenty of time. Meaning, this needs to be your sole business or work. If it isn’t, you need a site manager or at the least a significant other who does have the time.
When all the work is done… you’ll still need time and the financial situation to handle finding the right buyer for your Fishers, Indiana property. It could take days, or months to find this buyer. Are you financially able to weather that unpredictable financial burden? Ideally, your Indy home flip will bring buyers quickly and you’ll profit handsomely from your efforts. The reality is, that isn’t a given.
Do you have a plan if the house isn’t selling?
This is especially true in the age of COVID19. The market, while strong, is also unpredictable. Real estate is behind the curve of economic impacts. Meaning, the Indy housing market might not see the true impact of the pandemic for months. You’ll need to be prepared for that. This doesn’t mean you should abandon the idea of flipping, it simply means you’ll need to be very strategic in your purchases. You should also be prepared for the home not to sell, and have a backup plan if it doesn’t.
This might mean you decide to sell with seller financing. This can be an attractive option for buyers who need a home and are having trouble securing a traditional bank loan but have solid financial records of renting. You can also just rent the property until the market returns to a more stable state. This is where your relationship with a real estate agent is crucial. These professionals can walk you through all of these situations.
Are you ignoring the effort flipping requires or getting blinded by TV shows on HGTV?
“Flipped homes done by amateurs hardly ever pass inspection without multiple major issues being found. It is not a hobby. It needs to be done professionally and it seems today everyone and their brother want to do it, and in the end, the house is just “prettier not enhanced structurally or mechanically.” — Blog Quote
TV programming has a way of influencing our lives and leading us to believe things about ourselves that are just not accurate. It is of no fault to you… this programming is “designed” to make you believe that. That is what makes HGTV so compelling, and frankly, profitable. We have seen too many people in the flipping business who lose money because they have allowed the shiny world of TV hide all of the truly difficult and stressful aspects of flipping. You usually only catch snippets of turmoil and they somehow almost always work out for flippers on TV. You will need to reconcile that it might not always work out for you, and that can be a tough reality to stomach.
In the end, flipping is an awesome business to get into and we would be amiss if we didn’t proclaim that. However, as professionals, we would be negligent if we didn’t also speak about the hard parts of flipping homes in Indiana and we want to make sure our clients see the “whole” picture when it comes to ANYTHING real estate related. We encourage you to reach out to us with any questions. We are ready to partner with you when you’re ready to start your flipping journey.