House flipping looks easy on television. Someone buys a tired house, knocks out a wall, and sells it for a profit before the credits roll. Real projects are slower and messier than that, and the investors who do well are usually the ones who planned the boring parts carefully.
If you want to get in and out of a flip quickly, these three habits will do more for you than any design choice.
1. Work out the ARV before you make an offer
ARV stands for after-repair value: what the house should sell for once the work is done. Every other number in the deal hangs on it.
Start with recent sales of renovated homes nearby that match yours in size and layout. Then subtract everything it takes to get there:
- The purchase price
- Renovation costs, plus a cushion for surprises
- Financing costs and closing costs on both ends
- Taxes, insurance and utilities while you own it
- Agent commissions when you sell
What’s left is your profit. If that number is thin on paper, it will be thinner in real life, so walk away and find a better deal.
2. Decide who the buyer is first
A flip sells fastest when it’s finished for a specific kind of buyer. A starter home near good schools calls for different choices than a condo downtown.
Some buyers want a project and a discount. Most don’t. Most want to move in without lifting a paintbrush, and they’ll pay for that. Figure out who is buying in the neighborhood, look at what the last few sold listings offered, and renovate to that standard. Spending past it rarely comes back to you. For ideas on where the money is best spent, see our post on the best renovations for resale.
3. Put your team together before you close
Speed on a flip comes from people being ready on day one. That means lining up:
- A contractor who has done this kind of job and can start right away
- An agent who knows the neighborhood and can price the finished house
- A lender who can close on your timeline and release renovation funds without long delays
If any one of those is missing, the house sits. Every month it sits, you pay interest, taxes and insurance, and that comes straight out of your profit.
Financing the project
Sachem Lending offers fix and flip loans for investors buying and renovating residential property. If you have a deal in mind, you can start a borrower application or look over our loan terms first.
