Investment8 Golden Rules To Making Money In the Housing Market

Flipping: the process of buying cheap and selling high, while spending the minimum in between. Perhaps a somewhat harsh definition, but it does indicate that the process relies on being smart at what you are doing and not wasting time or money. If you have a mind to make cash flipping houses in Charleston SC, then these “8 Golden Rules ” will help you along the way: 

Rule 1: This is not your “forever ” home.  This is a business, not a passion; you will not live in the home and your own personal tastes should take second place to what the market wants.  That built-in fish tank or in-garage hot tub will not add value to most buyers so don’t do it.  Buy a cheap home in an expensive area and NEVER end up with an expensive home in a cheap area. Aim to deliver a good product that the real estate buyer will want, not a folly or a substandard plaster job destined to crumble in a year or two. This is a business, your business, treat it like a business. 

Rule 2: Buy at the right price.  For a rule of thumb, something like 60-70% of market value for a well-maintained home in the same area. That means rejecting most properties that are on the market.  It means a little luck, tax sales, motivated sellers, estate sales or major renovations needed.  Time is money and you need sufficient margin to hold the property, pay legal and Realtor fees on the sale, cost of borrowing, upgrades and the unexpected (insurances, contingency) and above all, make a profit at the end of the day.  Expect to investigate a neighborhood for months before making a purchase. 

Rule 3: Know your buyer persona.  If it’s a young, hip downtown loft, then keep away from the floral wallpaper and pink kitchens.  If it’s new family, those large low windows or open plan stairs may not be the best idea.  Baby boomers won’t like steep stairs; second home buyers look for low maintenance; dog owners like gardens as do gardeners. Know who your target audience is and develop design palettes that fit their needs.  

Rule 4: Have a fall back position.  This means finding a property that will rent well, in a good neighborhood, good schools, convenient to downtown, with off street parking, quiet surrounds. These factors will always provide some protection if the property market were to turn bullish and you are unable to sell profitably.  Once a rental return is established, cash can be taken out via a mortgage and returned to your business for the next project.

Rule 5: Patience and perseverance.  Taking time to plan, researching a good buy, delivering the renovation on time, good buying tactics for supplies and labor, maintaining good supplier relationships.  It’s all a balancing act and you need to keep a sense of perspective and calm when things inevitably go according to their own plan not yours.  It is far cheaper to say “No ” than to overspend. 

Rule 6: Employ professional subcontractors. You want to employ people you can trust, who set a fair price (not necessarily the lowest price), turn up when they promise to, and deliver a complete job on time.  A long list of excuses (i.e. dogs dying, sick cats, or trucks repossessed) is their mismanaged life and should not become your problem.  Those D.I.Y. programs where owners work by themselves? It’s only for the camera and not truly real. You can of course, invest sweat equity in doing jobs yourself but beware, your time is probably less useful than the person you could hire, and better spent organizing and setting up your next contract than painting “Flat White ” on a popcorn ceiling. 

Rule 7: Create a house file.  Title, surveys, guarantees, specifications, plans, pictures – these are all useful for you in the conversion and for the Realtor in the sale.  Be thorough and organized, stay on message with completion in your sights, and do not deviate from that goal. 

Rule 8: Plan your sale.  A project is not completed until the home belongs to the buyer, so plan the process.  Use a good Realtor who knows their market and is preferably full-time so they depend on effective selling for their living.  Stage your home so it shows well, clean up the yard, take good photographs, advertise it sensibly not passively. Consider having a third party pre-inspection to reveal issues that may become a buyer problem.  All in all, try to make the buyer experience quick and clean to deliver that profit you need. 

Keeping in mind these “8 Golden Rules ” to making money in the housing market will guide your ROI (Return On Investment). We know, because we’re experts when it comes to real estate investment and flipping houses in Charleston SC. We have employed these rules in our own investment portfolio. Our team is happy to provide insight and guidance when you’re ready to start an endeavor of your own – start your search for investment property here.