First-Time Denver Flipper? Follow These Tips
Breaking into the Denver real estate business can be a daunting and overwhelming experience. With all of the different options and advice from investors and other professionals, it can be easy to be pulled in multiple directions and to get lost. When you lose your focus, you can end up in a deal that you will regret. To be successful in real estate, as with any business, you need to start with a clear vision. Your vision can be unique to your personality and markets, especially when you plan on flipping houses. You can make a significant amount of money as a Denver flipper, but with this perk comes a good amount of risk – a single mistake or two can cost you big time. Check out the following tips for a first-time Denver flipper.
Have a Plan
Before you look at a Denver property, you need to have a clear idea of what you want from the real estate business. Is your goal to flip one property every month? How much time are you able to dedicate to finding deals? What amount of capital do you have at your disposal? These are just a few of the questions you need to ask yourself before finding your first Denver property. The more defined and detailed your plan is, the easier it will be to find deals and maximize profits.
Know the Property and Your Market
Being in the real estate business means you have to conduct thorough research and stay up-to-date with all kinds of information. Typically, flips that are unsuccessful failed because the flippers didn’t spend the amount of time necessary doing their homework and in most cases, you can avoid unpleasant surprises by doing your research. You need to be informed about your market including the local foreclosure rates and the current inventory. You should be able to spot electrical problems in the basement or a potential problem with a roof. It sounds overwhelming, and it can be, but before you invest in a property, you need to know everything you can.
Network
When you are just starting in the real estate business, good deals can be hard to come by. The best way to get past this is to network extensively. With a little time and effort, you can grow a network that will help you find lucrative deals. Many areas have local investment clubs and networking groups that meet for a few hours each week in the morning or after business hours. While the more contacts you have the better your chances of finding deals, but all it takes is one or two great contacts to completely change your business.
Appreciation
Simply stated, a Denver flipper is looking to buy low and sell high, and there are two main ways that this can happen. The first way is to buy in the right market and hope that the value increases. The second is to add value through upgrades and improvements. One of the most common mistakes a first-time Denver flipper makes is assuming that every improvement adds value to a property. The truth is that you need to know your market and make improvements that are desirable in your location. To do this, you need to spend time studying properties that have been sold recently and you need to take personal preferences out of the equation. What you like and find most appealing may not be what buyers are looking for. Your goal is to add value and increase demand for your property, so it’s important that you know what buyers are looking for and that you complete these improvements to maximize value added.
Exit Strategies
In an ideal scenario you would be able to flip a property and sell at the price you want in just a few weeks, but this is usually the exception rather than the rule. You need to be prepared to make decisions if everything doesn’t go as planned. What will you do if you don’t get any offers at your asking price? Would you prefer to lower your price or explore rental options? Before you do anything, it’s important that you have exit strategies in mind. Hopefully, you never have to use your exit strategies, but it’s always best to be prepared.
Assemble a Team
A successful flip takes a solid team that begins with your real estate agent and mortgage broker. You also need a real estate attorney to complete the deal. Once you own your property, you will need a contractor and subcontractors. An accountant will advise you on how to best allocate your profits. Do your research before you assemble your team because the people you choose can make or break your business.
Flipping Denver real estate gives you the opportunity to work and live on your own terms and limitless wealth. With all of this potential comes a great amount of risk as well. Before you enter into flipping properties, it is important to be proficient and prepared in all of the above areas to increase your chances of success.