Make sure your ARV (After Repair Value) and renovation budgets are as accurate as possible.
If you don’t have a good estimate for the ARV before purchasing the house, you can get yourself in trouble when it comes to your profit. Ask a realtor, broker, or appraiser for help, and consider getting multiple estimates if you really want to cover your bases. Of course, you can’t have fair ARV if you’re not sure how much the renovation will cost. This is why thorough inspections with a professional are imperative whenever possible. Remember, it doesn’t have to be a magazine-ready house to sell, although one “wow-factor” item can often help your property stand out and sell more quickly. Overall, though, you just need to fix what’s broken and update what’s outdated. You also need to remember that almost every renovation undertaking will have something unexpected come up. A 10% contingency is key. This gives you a good cushion when you’re determining budgeting and your ARV.
Know your abilities and ask for help.
When you’re first starting out, or are flipping a new type of property, it’s important to have help and support. Find a friend or mentor who has the experience you need, and see if they’re willing to answer any questions you have or to work together on a project so that you can learn the ropes.
Find a good contractor and establish a clear contract.
Your flips will flop without a reliable and capable contractor, so it’s imperative to find someone who can do the job well and within the timeframe. Once you’ve found someone you trust, write up a contract that includes all the details of the job, including what will happen if something goes wrong.
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