The Way To Flip Successfully The First Time
There is one way that you can avoid a lot of stress, not loose all of your free time, spend money when you have it, and learn the skills for your future projects. Simply by purchasing your first flip and live in it until you are ready to flip it.
Where do you live now? Do you rent, or own your own home? If you want to have a successful first flip you can purchase a house, after you have followed the guidelines I will set out for you, move into it, improve the property, flip it when the time is right, and make money. Many our flips were done this way.
Option 1 The benefits of moving into your first flip home, compared to purchasing a home to renovate for a quick flip but not living in it, are many.
Benefits Of Living In Your First Flip
- You turn your rent money into equity
- You are not under the gun for deadlines
- You can save money and do projects as you can afford them
- You can take more time learning about carpentry, decorating etc.
- You can shop for bargains and save even more
- You don't have to worry about subcontractors showing up for completion deadlines
- You may be able to take advantage of free labor of friends and family
- You don't have two mortgage payments to make.
- You won't be under stress of deadlines
- You will be able to enjoy much more of your free time
- You can wait until the market is right for a sale
The Downside Of Living In Your First Flip
- You plan on moving in three to four years
- You may have to live in the midst of partially completed projects
- You renovate to sell not to live in
- Your end profit will take a little longer to realize
SIDE NOTE Someone once asked me how I considered a renovation over three to four years a flip? A property you purchase to sell and make money on, and that you renovate for that specific purpose is a flip, plain and simple.
Normally when people buy a home, they plan on living in it for a number of years. Eventually they improve, renovate, etc. to their "own tastes". This does not always favor a future sale. Sometimes people's personal taste in decorating, furniture, etc., can get in the way of a fast sale, or getting top dollar. Remember, your tastes are not everybody's tastes. If you have very eclectic tastes then your property may appeal to even less of the market.
In moving into your flip, you are not only saving yourself a lot of possible headaches, stress and financial burden but just as important, you will not be upgrading, decorating, etc., to suit your "own tastes". Instead, following guidelines and using resources we will discuss in later articles, you will be developing the property for the largest possible group of home buyers. This is crucial for a successful flip. You need to save your own personal decorating tastes and ideas for your dream home.
Option 2 What about purchasing a home, you will not live in for a quick flip.
Benefits Of A Quick Flip You Are Not Living In
- You will not have to move
- You will not have to live in the midst of partially completed projects
- Your end profit may come quicker
The Downside Of A Quick Flip You Are Not Living In
- You are under the gun for deadlines
- You may not have enough self-contractor experience
- You may be dependent on subcontractors for completion
- You have to find subcontractors
- You may pay more for labor in busy times
- You may run into unexpected repair problems
- You have less time to shop for money saving bargains on materials
- Your completion may be affected by the weather
- You may have to make two mortgage payments
- It may cost you more money than anticipated (and probably will)
- It may take you more time than anticipated (and probably will)
- You will have less free time
- You may have increased stress
- The MTM factor could ruin you
If it's your first flip, option 1 is a much better scenario for you. If you know what you are doing, have the necessary experience and contacts, you may want to try Option 2. (Personally I normally go with Option 1 myself whenever I can). Once you have the experience, you can grab a real deal that you can make money on quick, if and when it comes available. (Not very often)
It will take you a few flips to gain the experience and contacts to make a quick flip work.
Next article in this series...the 3,2,1 times 2 theory to your dream home.