For those who are getting into the business of flipping residential properties, we’re giving away some family secrets that have helped us find success in this tough market. These helpful tips apply to the process of buying, renovating and selling single-family residences.
Of course, because we’re based in the Glendale area and mainly focus on properties in Burbank, Glendale and the Foothills (La Crescenta, La Canada Flintridge, Sunland, Tujunga), some of the things we’ve proven to work here may not apply to other markets abroad, mainly because of cultural, economical and sociological differences. (That’s kind of obvious, but it’s something to keep in mind.)
1. Stick to your guidelines.
It’s very easy to overpay on a property these days, thanks to the massive amount of competition for properties in the Glendale area. When looking to acquire a property for investment, it’s extremely important not to stray from your set of investment guidelines. These guidelines are metrics or prices you determine that are optimal for your investment. For instance, when analyzing a potential purchase, you should already have a good idea of what your costs and expenses will be (down payment, hard money loan, renovation budget, maintenance, utilities, eviction, etc.). You want to be able to have a formula that will help you figure out what your MAXIMUM purchase price should be if you’re going to make money, and always stick to it. If people overbid on a property, that’s their problem. Let them lose money on a deal. You’re looking for sound investments that will make you money, not headaches.
2. Never settle for “good enough” work”.
Unless you’re a contractor yourself, you’re going to meet a lot of craftsmen who like to cut corners. Build a team of guys that you like whose work is their passion. Luckily, in our area, there’s a huge number of skilled painters, tile-setters and contractors who take real pride in their work.
Also, a big mistake people make is getting cheap when it comes to material and fixtures. Wal-Mart toilets and mismatched counter-tops are never going to help you justify your price. Your objective is to completely transform this run down old house into a gorgeous new home for someone’s family. The purpose of making the home absolutely impressive is because if you do this enough times, you begin to build a reputation among the real estate agents in the area for putting out quality inventory that’s fun for them to show and sell. Keyword: SELL.
3. Have an expert interior designer stage your home.
After diligently spending time and money on a quality renovation, it only makes sense to compliment the work with proper staging. Recently, we’ve been using a company called Color Me Sold to bring our investment homes to life. There hasn’t been a single person who walks through our properties and doesn’t leave with a smile on his or her face.
4. Use a Realtor who has strong negotiation skills.
How do you know if a real estate agent has strong negotiation skills? Try to negotiate their fee. No one negotiates harder than a broker whose fee is about to get cut. If they don’t, you probably don’t want them negotiating price on your behalf.
5. Be a good neighbor.
When you purchase a home you’re eventually going to remodel and sell, it’s important to understand that although you’re not living there, you’re still part of the neighborhood and community. From a financial standpoint, you’re helping these people’s property values to go up. You’re eliminating an eyesore of a house on their block. You’re adding real intrinsic and extrinsic value to their neighborhood. If you acknowledge that and get to know the neighbors in the area, you’re soon going to find more and more opportunities to buy. Genuine care about other people goes a long way in this business.