MINNEAPOLIS - Pondering a house flipping project? You're not alone.
With the rise in popularity of shows like “Flip or Flop” and “House Flippers,” many amateurs are hoping to make a profit.
“I call it the two-by-four rule," says Kyle White of REMAX Advantage Plus. "What you don’t realize, it’s probably going to be twice as expensive as you think it’s going to be, and it’s probably going to take you four times longer than you think it’s going to take you.”
To avoid draining all your funds into a flip fail, here are some tips to keep your property project profitable.
First, “You’ve got to make sure your margins are there, right? Unless you’re going to live on the property and you’re going to live there a long time, you really have to be careful about how much you’re going to spend on a property,” says White.
Next, opt for a smooth layout. You can make all the cosmetic changes, but if the layout doesn’t appeal to buyers, it won’t sell.
Zip code is also important, according to White. "The neighborhood has to be awesome, otherwise you can put all you want into the house but you’re going to be maxed out when it comes to sell it and what you’re looking to get out of it, so you have to make sure you’re buying in the right areas to support the improvements you're making to the property.”
Be prepared to dip into your rainy day fund. Experts insist budgeting about 10 percent of your total cost for unknowns.
Finally, don’t underestimate the time and effort it takes to turn a dud into a dream house.
“I hear people say all the time, 'I want to flip a house, I want to find something that just needs carpet and paint,' and that doesn’t exist," says White.