Flip property investing

Whether you’re new to property flipping or you have been an avid rehabber for years, you’ve probably experienced a sense of anxiety that is common among flippers when they begin searching for the right residential property to tackle. This can lead to making the kind of emotional investment decisions that simply don’t work.

For those who are passionate about real estate, it’s all about finding the right property that makes for a perfect rehab project that, once completed, can easily sell at 10 percent or more above an estimated after repair value (ARV). For committed flippers, the buildup motivates action, and the sooner the better.

flip property investing



However, real estate investors also find themselves weighing their passion for real estate against the risk inherent to flipping. It’s possible that an investor’s excitement to start the next project can lead them to make mistakes and landing themselves in unwelcome situations. for real estate to drive you into bad deals and undesirable situations. During the thrill of the chase to find the next property, real estate investors must exercise discipline and adhere to good business practices that help them avoid anything less than solid investments.

Below are three tips for eliminating emotion from your flip property purchasing decisions

1: Have confidence in the numbers|
You have access to investment analysis tools you should be using. Running the numbers in your head is a far cry from following a proven, formal, and structured deal analysis process when it comes to driving your investment decisions.

Veteran residential property investors may insist their experience exempts them from using formal analysis tools. And while experience will make it easier to recognize good deals when you see them, the only way to achieve 100 percent confidence in a project’s prospects is by running the numbers through a formal analysis tool each and every time you feel ready to commit.

Just as important as trusting the numbers is resisting the urge to ignore the numbers and features that could negatively impact a deal. Investors often ignore undesirable qualities of a property they’re keen on flipping. Muster the self-discipline required to remain honest with yourself during the process of analyzing a potential investment deal by acknowledging all the variables. The ability to honestly gauge all attributes associated with a property, both good and bad, separates successful investors from the unsuccessful.

2: Establish strict standards for neighborhoods and areas to consider or avoid
Every residential real estate market has areas and neighborhoods that make for either good or not-so-good investment decisions. Additionally, each investor has a diverse degree of market knowledge regarding different areas of a region. When developing your rehab strategy, it’s important to identify the areas and neighborhoods that meet your project criteria. Before looking at any potential deals, establish the geographic boundaries that will be acceptable.

Once you identify the towns and neighborhoods that suit your investment criteria, assign a strict policy to stay away from those that do not. Even if you run all the numbers on a property outside of your “suitable” arena and it looks like a good deal, do not go there. It’s vital to make a decision on areas in which to look for investments up front in order to prevent yourself from making any decisions influenced by emotion.

Make your area classification limits clear with wholesalers and sellers to avoid wasting anyone’s time discussing deals that have no chance of approval in your qualification process. You don’t have to be rude when sharing your criteria, simply state that you don’t invest in the area mentioned. At the end of the day, be honest and stay away from areas that don’t fit your criteria. Don’t succumb to emotion and risk breaking your process.

3: Avoid Speculating
Avoid speculating in areas that do not offer historical data to support solid investments. Rely only on verifiable figures and enforce your geographic area criteria as long as historical data remains unchanged.

Every market has neighborhoods that are “up and coming,” being sold based on forecasts of an impending turnaround. It’s tempting to take advantage of opportunities envisioned in reference to areas like these. Regardless of how promising these potential turnarounds seem, it’s crucial that you stick to your analysis, which relies on factual historical information.

Don’t worry about missing out by sticking to your criteria. There are plenty of good deals in areas and communities that do have strong historical data to support your analysis. There’s no reason to risk your money by diving into a neighborhood that might take off. This is where investors really can land themselves in a mess by giving in to their emotions rather than sticking to the analysis process.

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flip property investing