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Home Flipping 101

 

Home Flipping 101

 

If you’re like many others, you’ve seen one or more of the house-flipping shows on television.  Looks easy enough, right?  Well, as with most things on TV, things aren’t as easy as they look.  That doesn’t mean you can’t be a successful house flipper, it just means you need to do some homework ahead of time in order to stand a chance of turning a profit.  Keep reading for some valuable info on this latest money-making craze that involves buying low-priced and usually distressed homes, spending time and money to get them market ready, and then selling for (hopefully) a healthy profit.

The first thing you need to understand is that house flipping costs money.  A pretty good bit of it, in fact.  If you don’t have ready access to cash and have to borrow money for your first project, make sure you can afford it.  Really afford it.  If you’re estimating 3 months from buy to sell, don’t just plan on paying your regular bills plus the project loan for that 3 months.  What if you run into renovation delays?  What if you can’t sell it as soon as it hits the market or sign a contract with buyers who run into delays on their end?  It’s probably a good idea to plan on the project taking twice as long as you think it should–just in case.

 

Once you’re sure you can cover the flipping expenses in addition to your own household expenses for as long as necessary, you need to make sure you understand your local real estate market.  Buying a dirt-cheap property is the goal, but only if it’s in an area where buyers are looking.  A bargain on the front end might not seem so great if it’s in an area that’s on the decline in terms of population and overall property values.  In flipping, as in the rest of real estate, location is everything.  Look for properties in areas that are in the process of being rejuvenated or redeveloped or that are in an area that is expected to grow due to an influx of jobs or new schools being built.

Learn as much as you possibly can about potential properties.  Traditional sales mean you should be able to do a thorough inspection of the property before submitting a bid.  If you aren’t very well versed on home inspections, you’d be wise to hire someone who is to walk the property (inside and out) with you to look for potential problems.  A home that isn’t sound in terms of structure, electrical, and plumbing can turn into a nightmare pretty quickly, especially if you’re not prepared for such problems.  Often, properties sold at auction can’t be closely inspected.  In these cases, having an expert to walk the perimeter can help identify signs of potential major problems (like water damage, outdated electrical work, or structural issues).

 

Knowing your local real estate market is also critical when determining exactly how to rehab your property.  Typically, kitchens and bathrooms (especially master baths) sell houses, so you’d be wise to make these rooms stand out.  Another key selling point for many buyers is a home that’s as energy efficient as possible.  You might install a good air conditioner (if the home doesn’t already have one) or energy-efficient windows.  In the end, you will have to calculate how much you absolutely have to spend to correct any safety or building code issues, which will determine what you have left for finishes.  Knowing what’s selling in the neighborhood and doing all you can to represent that in your flip will always be your best bet.  Networking with real estate pros in the area can help you make the most of your budget.  Speaking of your budget, once you’ve done enough homework to estimate your rehab cost, bump it up by at least 10%.  More often than not, unexpected expenses occur, so having a contingency built into your budget can be a lifesaver.  It’s way better to have money left over at the end of the project than project left over at the end of the money!

The Best Air Conditioners I Buy When Flipping Homes

 

For some folks, an air conditioner is a convenience; for others, it’s an absolute necessity.  If you live someplace where summers (and parts of other seasons, too) are sweltering, an air conditioner offers respite from the heat, which not only feels more comfortable, but also makes it less likely that electronics and appliances will overheat, or at the very least, make an already hot house even hotter.  In addition to cooling the air, air conditioners also remove excess moisture from the air, making one an absolute must-have for those whose summers include humidity level numbers that nearly rival the temperature.  While central AC units are predominant in most of the homes and rental units in the hottest and most humid regions, portable units can be an adjunct to a whole-home system or, in the case of homes and rentals without central air, a lifesaver.  Window units may still be the most common portable units, but more and more manufacturers are recognizing the need for standalone models that don’t require window mounting or any other permanent installation.

 

As mentioned above, air conditioners remove excess moisture from the air in addition to cooling it.  This aspect of an AC’s functionality isn’t all that important to those who live in arid climates, but there really isn’t a separate machine type for drier climates.  If you live in an area where humidity isn’t a factor, you might be able to save a few bucks by not needing a unit that excels in this category or has one of the larger moisture-collection containers or a self-evaporating onboard dehumidifier that negates the need for a separate collection container.  You also won’t need to worry much about how easy these receptacles are to empty.  If, on the other hand, humidity is nearly as much of a concern as the heat, make sure you look for a model that removes as much moisture from the air as possible because drier air is easier to cool and just feels more comfortable.

 

When it comes to how powerful a unit you need, there are a number of factors to consider.  Unfortunately, it isn’t as easy as a certain number of tons covers a certain number of square feet.  Tons as a measure of cooling power goes back to the days when room cooling was achieved by massive blocks of ice.  A ton of cooling power refers to how much cooling power an actual ton of ice has.  Not terribly helpful now, right?  

While many units will relate their power to square footage, keep in mind that things like room configuration, AC unit placement, humidity level, and the energy efficiency of your windows and roof also come into play.  Standalone units in rooms that are crowded, especially with electronics or other heat-generating devices or appliances, will need to be more powerful or have to work harder than units in rooms without the extra heat.  That extra heat could also come from direct sunlight through regular glass windows or outside heat coming in through drafty windows.  In other words, a 100 square foot room that’s well sealed and not full of devices putting off their own heat will require less power to cool than an equally-sized room that’s affected by any of the above heat-increasing factors.

 

If you opt for a window unit, make sure you measure the opening accurately before you choose a model.  If you select a model that’s smaller than the opening, you can find various gap fillers to enclose the extra space.  If you end up with a model that’s larger than its intended opening, well, that would be bad.  In addition to needing to fit the window opening, these units need to remain level so that proper draining of collected moisture can happen.  If you don’t have a window, you’ll want to find one of the many standalone portable air conditioners (also called PACs) available today, since window units, because of drainage and exhaust needs, aren’t generally appropriate for indoor use.

 

Visit airconditionerlab.com for reviews, including pros and cons, of some of the most popular window units and stand-alone models that are also on the budget-friendly side.