One of the most popular short term investing tactics is flipping houses; which also can have the highest risk. But especially during the pandemic right? Or could this be one of the best times in history to flip houses? Many investors are abandoning “fix and flips” due to the fact we don’t know how low the economy is going to go after the dust settles from the pandemic. I Am Going To Give You 5 Ways You Can Successfully Flip During This Pandemic.
1. Buy Right
I know this may go without saying…but this is the time to be looking for deals that are a little bit below where you would usually invest. If you get your properties from wholesalers take away 10% from the ARV (After Repair Value) to make sure after renovations to ensure you can still make a profit at the sale of the property. Looking for an extra margin is key to make sure you can fix and flip properties with success, especially when you don’t know what the market is going to do.
You want to set up your propriety with a minimum of 10% margin. Meaning if renovation costs ran higher and you had to discount the house 10% at the sale would you still be able to turn a worthy profit. If not, that may not be the best deal for you.
The best place to make up this number is in the purchase price. If they are asking 150K see if you can get another 15K off the asking price (again remember the rule of 10%). This sets you up immediately to be able to breathe a little bit more in an uncertain economic environment.
2. Renegotiate Renovation Costs
Another great place to find an extra margin is in renovation costs. While the material may be more of an objective number, take a look if there anywhere you can use an off-brand that still maintains the level of quality you desire to provide your buyers. Take a look at every purchase to see if there is anywhere you can cut costs without cutting quality.
The greatest way to save on renovation costs is in your labor. I would negotiate with your contractors to provide you with a better deal. You ask them if they’d be willing to come down on their price a bit due to the uncertainty of the pandemic. Some will and some won’t. What I like to do is have multiple contractors that I work with just in case one can’t do a project when I need it done or if I have multiple projects going on a one time and they can handle both of them. So this is a great opportunity to interview 2-3 new contractors and see if you can find someone that does great work for less than your used to paying.
Again – our goal is to create more margin for sale to ensure have don’t get stuck with a house we can’t sell, or f we had to sell it for less we’d still make money.
3. Make Sure The House Looks Good Virtually
Many houses look good when people show up in person. But how do they look through a lens? How do they look when people are viewing them on a screen? In many ways because many people are buying houses without seeing the home in person, it takes away the emotion.