1. The Location Of The House
When you buy houses, you must consider the location. Location is very important, because if a house is in a bad location, then that severely decreases the probability that someone will buy it for a reasonable price, while also decreasing the probability that someone will buy it, in the first place.
You need to understand the house, within the context that it resides within. Consider the factors related to, say, transportation. Is there a lot of parking space? How far away is the city? Are there any public transportation routes nearby?
Then, consider the people in the neighborhood. How old are they? What demographic are they? Understand that the people in this neighborhood are, more often than not, going to be your average potential buyer.
If the neighborhood is full of families with young children, then it’s probably close to a school, and your potential buyers will be looking for that kind of accessibility. Remember to think about what home buyers are looking for, when it comes to that location.
There are many, many variables to take into consideration, when it comes to location. Especially when it comes to the people that you’re going to be selling this house to.
However, you must also consider the fact that getting to and from this house could be a bit of a hassle, depending on the location of the house. It might be far away, which makes your commute longer, which adds up to larger fuel costs. Or, for example, you may not have the time to actually visit the property on a regular basis. Both of those things can lead to a lot of difficulties in actually being able to fix up the house, and to, of course, flip it.
2. The Size And Scope Of The Remodel
This is especially important if you’re trying to keep costs relatively low, and you don’t have a large team of contractors to help you out.
Consider the size of the house. How big is it? How many floors are there? Just how many things will you need to fix up? Can you do that on your own, or you will need other contractors to be there? How much will all of that cost you?
These are very important questions to ask, because you may find that the investment - time, money, or both - is simply too much, and there isn’t enough return on investment.
3. The Return On Investment
Just consider the amount of money that you’ll have to put into turning that property into a marketable home. Just think about that, and then consider how much you’ll make off of it, after having spent all of that money on repairs and taxes and all of the other prices that come with buying and fixing up a home.
Then, ask yourself the question of whether or not it’s worth it, financially speaking?
Obviously, flipping a house comes with a number of uncertainties that simply can’t be avoided. You never really know if a house is going to sell or not, but you always have to take those risks, in order to be successful.
That said, there are times when the perceived risk is simply too great, and the return on investment is so uncertain, that it just isn’t worth it.
Make sure to always consider the return on investment, while also considering the question of whether or not your investment will, in fact, have a viable return.
Certain investments are more viable than others, such as various cash for houses investments, due to their relatively low cost, and the fact that most of the people doing that want to sell their home quickly, without having to worry very much.
4. The Repairs That Are Needed
As silly as it may seem to bring this one up, a lot of the people who flip houses don’t actually take the time to consider the myriad of repairs that are needed.
This is similar to considering the size and scope of the project itself, but you also need to consider what, specifically, needs to be repaired and fixed up. From that, you can gain a much greater understanding of how much money it’s going to cost you, and based on your consideration of the location and likelihood of it being sold for a reasonable price.
5. How Long It Will Take To Adequately Repair The Home
This ties directly into your return on investment. If a home takes a very long time to repair, and an even longer time to sell, then it isn’t worth it. That kind of time investment is never worth it, and financially, it might actually cost you a lot of money. Not just because you have to repair the house, because even if that financial investment was low, you still have to make sure that the house remains on market, and depending on your skill set, that you still have a realtor/real estate agent that is still trying to sell the home.
If it takes too long for all of those things, though, then the return on investment quickly becomes minimal.
You can discern this by simply taking a look at the current housing market in your city, and then looking at the housing market in that neighborhood. If few people are buying houses, and you know that house is going to need many repairs and that it might take a long time before it sells; it isn’t worth it.
6. How Thorough Your Cleaning And Staging Of The Home Is
Let’s say that you’ve made the investment. You’ve made the repairs. Things are going very well, and it looks like you’re going to be able to sell that house in a fairly quick amount of time, without a lot of hassle. Basically, it looks like you have a solid return on investment.
Now, the next-step is being able to sell the home. This requires a bit of marketing. You can hire a realtor to do this, and they’ll probably do a really good job, but depending on your skillset and your current financial status, along with the property itself, it may actually be a better idea to do it yourself.
If you aren’t a very good photographer, then it’s probably a good idea to hire a professional for that particular task, because they tend to know how to get the most marketable images that will entice potential buyers.
However, when it comes to actually staging the home, you can probably do that yourself. Take a look at the online listings for other houses around that area, and especially the houses that are being sold by real estate agents that have had a lot of success. Then, orient the staging of the home around those trends, and make sure that it looks nice and neat, as well as presentable and distinct in its own unique way.
As for cleaning the house, this goes without saying, but make sure that it is absolutely spotless. Make sure that it looks as if it’s been that way for a long while, when in reality, it’s undergone a variety of repairs within a fairly recent span of time.
7. Your Willingness To Negotiate
Selling a house is a process, and this process requires negotiation on both your part, and the part of the buyer. If you are unwilling to negotiate towards a reasonable price, then it’s likely that this house simply won’t sell.
According to Corey Tyner of Tyner Phoenix Home Buyers, while it is understandable that some houses are worth a lot of money, and when you’ve put in a considerable amount of money towards a particular house, then it becomes a lot harder to negotiate with a clear head.
That is why you need to fully accept that during the process of negotiation, you may very well have to negotiate down, towards a more reasonable price. If you are unwilling to do so, then that impacts both the sale of the house, and, in many ways, your credibility as a house flipper.
8. If Your Financial Expectations Are Realistic
This is an important question to ask, regardless of where you’re currently at within the process. Are your financial expectations for the sale of this house realistic? Will people actually put forth the amount of money that you are asking for? Or, is the price going to drive away people due to its lack of consideration for both the actual marketplace value of the house, and the demographic that lives in that neighborhood?
Ask yourself those questions more than once. But, especially when you haven’t actually purchased the house yet, and you’re just doing research.
If the only way you’re going to make a good return on investment is through setting the price at a fairly unrealistic amount, then you shouldn’t buy the house.