A lot of new house flippers have come to me with concerns on being able to sell their properties after the rehab work has been completed. Will they be able to get the right price? Will their house even sell? Or will they be stuck with a house and financing costs for the rest of eternity? I’ll be honest, this is really a non-issue. Why? Because if you have done all the other parts of your deal the right way, selling is one of the parts of flipping a house that almost takes care of itself.
One of the first things you should do when you are back in the acquisition side of the deal is to make sure you have done your due diligence and checked that the house in your farm area will be able to sell for the amount you determined with your ARV. Since your ARV is based on other sales of similar properties in that neighborhood, you should have a lot of confidence that (if you analyzed your property right from the beginning) that it will also sell. After all, selling a property for a specific price is all about making sure that the value of that house matches the price you are asking. Think of it in this way: If you want to sell a hamburger for $50, you have to make sure that the perception of that hamburger matches the price you have set. There is a reason that hamburgers at McDonaldbs are a buck. Because McDonald’s knows through a lot of testing and analysis that this is the price at which their productbs value is worth a customerbs purchase. So, you need to know that the value you add to the property will really give you the price that you have determined is suitable for the market conditions.
Next, during the financing stage of the house flipping process, you should have made sure that you were careful about the costs of financing your deal. If you didn’t account for certain points on your hard money loan, or if you miscalculated the holding costs for the rehab period, then you will find the numbers donbt match up at the end. Knowing your numbers is an important part of this process.
Finally, during the rehab process, you should be sure that your contractor is on task and knows exactly what the expectations are. If you did a careful vetting before bringing on your contractor then you can be confident that they will do the work on-time and on-budget. Adding an extra 2 months to a rehab project can kill your deal, or at least put a big dent in your profits. So, selling a house is really just a matter of making sure you are on top of each step of the house flipping process. When you have done a top-notch job of analyzing your deal, securing the right financing and rehabbing the house the right way, you will never need to worry about whether or not your house will sell.