The investor should have at least a cushion of 15-20% budget to be able to cover any unexpected expenses.Take into consideration insurance and property tax in the budget as well as inspection costs. Below are some tips that you can follow in order to help you avoid unexpected costs:
1- In order to prevent any unexpected costs, you can start by having the property evaluated before beginning the projects. Like they say “never judge a book by its cover” a house that looks great from the outside can have many issues from the inside can be costly for your budget. Some unexpected costs can be from drainage, foundation or mold.
2- It is very important that you make the right decisions without putting your pockets in trouble. Investors try to save money by doing the work themselves and end up paying thousands of dollars on professionals who have to fix their mistakes. If you don’t know, hire someone that can help you!
3- Be considerate of the location of the property that you want to renovate. Over-improving a home thinking that it will sell is a major error. If the location does not call for it then don’t do it! You don’t want to end up with a luxurious home that indeed is beautiful but that the neighborhood cannot sustain. Your potential buyer is looking for the great location, if you have a house that fits its need then you have a winner. Your location is key to knowing and understanding what the buyer is looking for.
Always take into consideration more than what you think you will need. Trust other fix-n-flipper and ask for their advice. Do your research on what are common repairs on old homes in order to be prepared to fix it. You want to make a profit off your fix-n-flip project, don’t let the little things affect you greatly.
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