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If you’re eager to start your journey as a house flipper, our house flipping checklist can help you stay organized at every point along the way. Flipping houses isn’t as easy as it looks on television. You need to be able to understand current market trends, have renovation skills (or at least have a network of trusted contractors and vendors), and have overall real estate savvy.
You can ensure that you’ll have a successful and profitable flip by keeping track of every step in this process by using our house flipping checklist.
The Importance: It’s important to know how the people in your target market are changing over time. Fix-and-flip investments are all about selling your fixed-up home to a new buyer. This is called the “flip.” So, figuring out if there’s likely to be a ready buyer in the market is very important to your success.
Actionable Tips: You’ll want to check real estate websites like Zillow, Realtor.com, and local real estate investing groups to follow market trends. In doing so, you can get a better sense of pricing, demand, and growth areas.
Note: If you want to stay up to date with the latest goings on in real estate investing, you’ll want to download New Western’s latest edition of The Flip Side, Residential Real Estate Investing Trends for 2024!
The Importance: Even if you’re a wiz at keeping track of your finances, you need a solid budget and financial plan when flipping houses. Why? You need to plan for the unexpected, sure, but a detailed financial plan can help you determine whether your flip will make money, if you’ll break even, or if you’ll even lose money.
Actionable Tips: Create a detailed spreadsheet that lists all of the potential expenses you may incur while working on this particular project. You’ll want to include things like purchase price, cost of the renovations, holding costs, as well as having a 10 to 20% contingency for the “what-if” scenario. We recommend using online budgeting tools like House Flipping Calculator, Flipster, and REI/kit, or hiring a financial planner who specializes in house flipping.
The Importance: Although there are many ways to fund a flip, it’s important to secure financing as soon as you can. You can look at the various loan options from banks, credit unions, or hard-money lenders. If you’re unable to secure financing through traditional means, consider reaching out to private lenders.
Actionable Tips: You’ll want to have a solid business plan that you can present to potential lenders. The business plan will help investors decide whether your venture is viable or not.
Note: To learn more about the different types of financing available and how to secure financing, please read: Financing Your Investment: What Are the Best Ways to Finance Your Investment Property? Learn From the Experts
The Importance: As you do your market research and compare neighborhoods, take note of important factors such as rising property values, good schools, low crime rates, and desirable amenities like parks and shopping areas. These will help you nail down where you’ll ultimately want to buy a property.
Actionable Tips: Use programs like Area Vibes, Livability, Neighborhood Scout, and CrimeGrade.org to help you analyze these factors and more.
The Importance: Along with identifying ideal locations, you should be keeping an eye out on what properties are available, the prices, and how long a property sits on the market when you’re doing market research.
Actionable Tips: Connect with real estate agents in your desired area and let them know you’re looking for investment opportunities. With the right connections, not only will they be able to tell you about new properties that are coming onto the market, but they can also help you find below-market deals or pocket listings.
The Importance: While you’ll want to do a property inspection with a property inspector before actually sealing the deal, it’s helpful to do your own inspection. You’ll want to take note of repairs that will need to be done, what kind of upgrades to focus on, and more.
Actionable Tips: Learn to identify key issues like foundation problems, outdated electrical systems, or roof damage. Again, hiring a home inspector to come through a prospective property is always recommended.
The Importance: When you find a property you’re interested in making an offer on, be ready to negotiate. You’ll want to make an offer based on your budget and potential renovation costs, but you also have to be ready to know when to walk away from a deal if the seller won’t budge on price.
Actionable Tips:
The Importance: After your offer has been accepted, make sure you read through the contract carefully. Your real estate agent is going to be a key player here because they can explain any part of the contract you are concerned about. This is incredibly important because you don’t want to get into an unfavorable contract that could cost you thousands of dollars (if not more) in the long run.
Actionable Tips: Ask your agent to go over the terms and conditions of the sale, as well as the contingencies. Don’t be afraid to ask them for clarifications; ask them to make an addendum or amendment to the contract if there’s something you don’t agree with.
The Importance: You need to have a solid plan in place if you’re going to flip a property. You’ll want to create a detailed renovation plan that prioritizes projects as well as an expected price range for each project and how long each task should take. This will help you stay on budget and complete tasks in a timely manner.
Actionable Tips: Hire professionals to help you create a renovation plan. These can be contractors, interior designers, and even architects or engineers if you’re doing large renovations that’ll change the structure of the property.
The Importance: It’s important to find professionals who have an established career and a good reputation in their field. You can ask fellow investors, real estate experts, or do a quick Google search to find qualified experts. Be sure to ask a prospective contractor for references and examples of their previous work.
Actionable Tips: It’s highly recommended to look for contractors who specialize in flipping houses. They’ll understand the importance of sticking to a schedule, they’ll adhere to local regulations, and they generally provide superior work than, say, if you hire a day laborer. It’s advisable to work out a pay schedule with the contractor so that there is a financial incentive for them to continue to do quality and timely work.
The Importance: Any work that you plan on doing generally requires some kind of permit from your local code enforcement office. You’ll want to make sure you get the proper permits for each of your projects (or whatever is required by your municipality). Otherwise, you could be fined or may even have to undo and redo any unpermitted work, thus costing you thousands of dollars and throwing your schedule off completely.
Actionable Tips: Generally, the contractor you hire will be the one going to your municipality to get the necessary permits. Don’t forget to factor the time it’ll take for permits to be drawn up and their associated costs when you’re creating your renovation plan and budget.
The Importance: Throughout the renovation process, you’ll need to stop by periodically to make sure everything is proceeding without any hiccups. You don’t want to come back to the jobsite and realize something was done incorrectly, all because of a miscommunication or lack of guidance from you.
Actionable Tips: You must be willing to be available at all times to answer questions and make decisions should problems arise. If you cannot be available at all times, have a secondary person the contractors can reach out to who can make decisions on your behalf. You also need to keep in mind that there will be things that change or go wrong that will force you to make adjustments along the way. Build in some leeway both financially and in your timeline so that you have the ability to be flexible when the situation calls for it.
The Importance: Don’t be afraid to take notes when you’re visiting the jobsite. You’re spending a lot of money on this flip, so you need to make sure everything is done according to your vision. If you spot something amiss, inform the contractor immediately so the problem can be addressed right away. This will save time, money, and frustration!
Actionable Tips: Hire a home inspector to check out the work when the renovations have been completed. You’ll want to do this before listing the property so you can ensure that when a buyer comes through, their home inspection will pass with flying colors and the transaction can proceed smoothly.
The Importance: You don’t want to show a bare property without any welcoming touches and finishes. Choose neutral colors and finishes so that a larger pool of buyers will be interested in your property. If you have the budget, have the property staged tastefully. This will help potential buyers see themselves living there, as well as give them an idea of how to use the spaces.
Actionable Tips: You could follow the latest interior design trends, but we recommend choosing elements that will last the test of time. For example, choose natural stone countertops instead of butcher block or laminate countertops. Choose mid-toned hardwood floors instead of stylized tile or a bold color for carpeting.
The Importance: Your property may be the best on the block, but no one will know it if you don’t market it well. Your real estate agent should have a good marketing plan and access to real estate platforms to advertise your newly renovated property.
Actionable Tips: Hire a professional photographer to take high-quality photos of your property. You may also want to consider hiring a copywriter to create a compelling listing that will draw in a lot of potential buyers.
Note: To learn more about how to market and sell your investment property, please read: Marketing Your Investment: Step by Step Guide on Selling Your Investment Property Like the Pros
The Importance: Along with marketing, open houses and showings help to get people interested in your property. They’ll get to walk through the property and admire the work you’ve put into it. If done well, you should get multiple offers in little to no time–especially if the market is hot!
Actionable Tips: Always make sure the property is clean, well-lit, and welcoming. If potential buyers have any questions about the renovations, be ready to answer the questions and provide documentation if requested. Your real estate agent may or may not ask you to be there during open houses, so consider having a pamphlet available for buyers with pertinent information.
The Importance: You don’t want to accept the first offer that comes your way. Carefully go through each offer with your real estate agent and/or your real estate attorney to help you choose the best option or negotiate for better terms.
Actionable Tips: Don’t be offended if an offer comes in below asking price. It’s okay to negotiate and don’t feel like you have to settle if the negotiations come to a stalemate.
The Importance: You’re nearing the home stretch! Work closely with your agent and real estate attorney to get the deal finalized. It’s important that the legal documents and closing documents have been thoroughly reviewed to ensure accuracy.
Actionable Tips: When you’re going through the closing documents to ensure the closing costs are accurate. If you have any questions, ask your agent for clarifications because any mistakes can (and will) affect your final profit margin!
The Importance: After the completion of your first flip, look back over the whole experience and see what worked well and how you could have done things differently. Reflecting on your experience can go a long way in helping you fine tune your process and make your life easier going forward.
Actionable Tips: Keep some kind of record of your experience flipping a house. You don’t have to do this for each flip you do, but it can go a long way in helping you learn about real estate investing and grow your business.
Answer: The key elements should you need to focus on include market research, budgeting, financing, property selection, inspection, renovation planning, hiring contractors, obtaining permits, managing renovations, staging, marketing, and final sale processes. Fortunately, you’ll have help along the way once you hire a real estate agent and/or attorney, and contractors.
Answer: Market research is crucial because it’s necessary to understand the local real estate trends, identifying high-demand areas, and determining the potential ROI. Market research goes a long way in guiding you to make informed decisions about where and what type of property to invest in.
Note: To learn more about how to find the best investment properties, please read our guide: Selecting Your Investment: A Guide to Finding the Best Investment Properties for Your Needs.
Answer: Your house flipping checklist should include setting a realistic budget, securing financing, estimating renovation costs, factoring in unexpected expenses, and calculating potential ROI.
Disclaimer: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
