So You Bought a Foreclosure…Now What?

You have taken the leap by buying a foreclosure. Your plan is to get in, make repairs and upgrades, and flip it for a profit. It’s a brave undertaking but one that net the average flipper $30,000 per house in 2012. While no one formula fits every situation, there are a number of points that most experts agree can help you net the greatest reward.

Be Organized

Flipping a home is not an endeavor you want to go into without a solid plan. Know how much you have to spend, plan for cost overruns, prepare to have permits pulled as needed, and pre-plan for clean-up. As anyone who has ever walked into a foreclosed home can attest, they can be a mess. Make sure you have a service like Next Day Dumpsters deliver the receptacles you are going to need as you begin tearing out anything that can’t be saved. Sticking to a tight schedule is particularly important as you flip a home, and renting a dumpster in Minneapolis can be achieved through one simple phone call that takes less than five minutes of your time.

Think Long and Hard

The type of property you buy can make a world of difference when it comes time to sell. Chicago Magazine recommends that flippers should stick to single family homes. This is because it is easier for potential buyers to secure a mortgage on a fixed-up single family home than on a condo. Mortgage companies look at the number of foreclosed condos in an area and are hesitant to okay a mortgage in an area with a high foreclosure rate.

Look at the Bottom Line

The lender who is foreclosing on a particular property would far rather liquidate and cut his losses than hold on to a mortgage that is costing them money. Negotiate with the lender for the best possible price on the house, suggests This is one situation in which you are in a position to bargain.

Don’t Get Cute

MSN Real Estate points out the danger of risky or creative financing techniques. It is common for new investors to underestimate the time and money it is going to take to fix and sell a property. If you need a loan to purchase the property, make sure that your mortgage is as straight-forward as possible so that you are not burdened with the extra weight of worrying about what’s going to happen if you don’t sell by a certain date.

Tap the Experts

Some home flippers — particularly novices — make the mistake of believing that they can do everything themselves. Smart, successful flippers understand their own strengths and know that they’re sometimes going to have to call in the experts for those tasks not in their personal wheelhouse. This is especially true for technical issues like plumbing and electricity. If you’re not a roofer, bringing in another crew to do the job can save you money and headaches in the long run.

Remember Who You’re Rehabbing for

As a flipper, you are making the changes to a property that will bring in the most potential buyers. You shouldn’t be decorating to please your own aesthetics or adding splashy and expensive items that will not give you a return on your investment. For example, just because you like the color green, you need to know that buyers are likely to be turned off by that green tile you put in the bathroom. Items like floor warmers, spa shower heads, and imported floor tiles may look great, but buyers are not willing to pay more for the property because they are there. Appeal to as many buyers as possible by keeping your color palette neutral and your choices simple.

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