The Ten Rules of House Flipping

Every time I turn on the television it seems I stumble upon yet another house flipping show. Recently, after watching an episode where the flippers seemed to do everything wrong and still made more than I do in a year, I started to think what others all over the country think: Why not me? Plus, I knew that I had a secret weapon. My cousin Paul has made a living flipping properties for the last twelve years. Ready to give it a go, I flew to California to pick Paul's brain. What I came home with were the ten unbreakable rules of house flipping:

1. Have a plan

This one seems self-evident but Paul told be I'd be shocked by how many amateur flippers get into the game without doing any research. Flipping is like any other business and requires a business plan. You need to research the materials needed, the cost of those materials and labor. You need to see what other homes are selling for in the area, and how comparable they are to your property. You need to develop a timeline for projects and a budget. Don't forget about carrying costs. Every day you own the property costs you money. Budget time to sell the home and time for the closing process. There can be weeks between receiving a bid and closing the deal. And you always, always need to give yourself padding: extra time and extra money for the unexpected.

2. Know your neighborhood, know your audience

It is unwise, especially for your first flip to pick an unfamiliar or far away area. Keeping your flip close to you means that you are always available to be on site. Choosing a neighborhood you are familiar with means that you know your target audience. Is it a family-oriented area? Then you should pick a family style home. A hip, urban area? Maybe a loft or condo would be most desirable. Remember, at the end of the project you need to sell the home. Appealing to as many people as possible ensures as many bids as possible. This also applies to décor and fixtures. Aqua might be your favorite color, but a neutral is more likely to generate offers.

3. Get an inspection