Have you ever seen house flipping shows where they renovate a house and make $50,000 in two weeks? It can be done, but these “reality TV” only captures part of the hefty workload going in to flipping a house.
House flipping takes a lot of work, and it takes a lot more than two weeks to see your project through. Hefty returns are possible, but you need to make sure you understand the risk and steps involved into making a project profitable.
If you’re thinking about flipping a house in LA, here are 8 steps you should understand before if you want to maximize your return:
1) Research a the LA real estate market
Not every market is good for flipping houses. Luckily, the Los Angeles real estate market is one of the most the most desirable places to invest in the world. If you put in the time to find good deals, and your timing is good, the profits can be substantial.
It’s important to look into up and coming neighborhoods. You should consult a real estate agent to get professional and timely advice.
2) Set a budget and business plan
Real estate investors are entrepreneurs. Entrepreneurs need a business plan. It doesn’t need to be anything fancy, but it has to include a budget, a timeline, and a project scope.
How much are you investing? Do you have enough to cover renovation costs? What kind of scope are you comfortable tackling?
We usually recommend starting with cosmetic updates for the first house flip or two, including bathroom renovation and a kitchen remodel. New flooring, paint, and fixtures go a long way as well.
Try to avoid structural problems, as well as electrical and plumbing. These will require more permits and slow down your project.
Your margin will be lower with cosmetic house flips, but the project will be faster, less risky, and cost substantially less.
3) Line up your financing before you need it
Before you start making offers, make sure you have a lender who can fund your deal. If you don’t have a lender in mind, talk to your real estate agent and ask for recommendations.
4) Start networking with LA contractors
You need to start building relationships with trustworthy general contractors in Los Angeles. You may want to start getting quotes before the property is even under contract.
An important piece of learning how to flip houses is building a network of great contractors: general contractors, electricians, roofers, plumbers, painters, and HVAC professionals.
If you need help with finding great contractors in LA at affordable prices, reach out to us and we can connect you to our network.
5) Find a house to flip
Finding good deals is an essential part of flipping houses in Los Angeles. Ideally you want to find properties below market value, but with wide enough margins to cover your expenses.
Recognizing good deals in LA is a massive topic in itself, but a good real estate agent can point you in the right direction.
6) Buy the house
Once your offer is accepted it’s important to hire a home inspector to know what you’re up against. Home inspections take several hours and are comprehensive.
Get quotes from contractors once you know the scope of the project and schedule them to start work right away.
Once the house is yours, it’s time to start the work. You’re on the clock from day one. Every month that goes by, the more interest you pay and the less profit you’ll make.
Efficiency is extremely important when it comes to renovations. Too often contractors will tell you they can finish a project in a week, but they end up fiddling around with the details for up to a month.
This part is largely handled by your realtor. Make sure you hire and expert in your specific market.
Final Thought on Flipping Houses in Los Angeles
Flipping a home for the first tan can be stressful. Lean on experts including your lender, contractor, inspectors, and realtor for advice. When in doubt, get additional opinions.
Extensive research and preparation will help you avoid mistakes. Decisive action will move your project forward and will create results that will earn you profit.
If you are interested in flipping a house, and are looking for a general contractor in LA to help with your renovations, contact us to day for a quote.
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