Steven Covey is a well known self-improvement guru famous for writing â€œ7 Habits of Highly Effective Peopleâ€. He gave us seven simple principles that we can use to achieve success in life and business. Is it possible to apply his principles to house flipping?
His seven core habits are applicable to house flipping but one of these habits particularly stands out; â€œbegin with the end in mindâ€.
How The Begin With The End In Mind Habit Applies
Itâ€™s common knowledge that making a profit on house flipping is not easy but when you know exactly what it is you want to accomplish, you eventually end up having a laser-like focus that eventually concludes with you making a profit.
Numbers can break or make your house flips. Knowing how to do the math is not the hard part; the hard part is determining the correct numbers to use. In order for you to be able to accomplish this, you need to do a fair amount of research and assistance from your house flipping team.
The moment you learn how to flip houses with the end in mind, you will start making profits.
Is What You Pay For The House Important The Most Important Number In House Flipping?
While this is a very important number, what you pay for the house isÂ not the most important number. Rehab costs are also not the most important.
The most important number is the After Repair Value (ARV) which drives all the other numbers. The After Repair Value is â€œthe endâ€ you should have in mind and you should use it to drive everything you do in house flipping.
Almost all the projections that you will make during the house flipping process will be based on the ARV. If the ARV is right, then every other single projection will also be right and your profit margin will be great.
Hereâ€™s How You Begin With The End In Mind In House Flipping
1. Find A Great Real Estate Agent
A great and qualified real estate agent can do a comprehensive market analysis and give you a more accurate ARV. Since we have already established that ARV is the most important number, you need to find a real estate agent that is good at their job.
A good real estate agent will look at properties in the area that have already been sold and not the ones that are for sale. This is because properties that have already been sold will help them determine how much your property can sell for.
2. Communicate Your Plans To Your Agent
Communication is important because it ensures everyone is rowing in the same direction. Finding a good agent is not good enough if you do not communicate effectively with them. They have to be 100% with you on the same page. Your house flipping team has to also be on the same page with you.
Donâ€™t sit behind a computer and send out emails or communicate via phone alone. Get out there and talk to your house flipping team.
Other Tips On ARV
It Doesnâ€™t Hurt To Get A Third Opinion
It doesnâ€™t hurt to get a second or even third opinion from another agent. You can never be too careful when determining ARV.
Hire A Paid Appraiser
You might think this is another added expense but it doesnâ€™t compare to the cost that you will incur when you gauge all your projection off a wrong ARV.
Make Google your best friend and use it to double check after repair values. Itâ€™s not advisable to determine your final ARV off internet information but you can use it to double check. In addition, you can conduct a comparative market analysis.
Be wary of the broker who tries to inflate the ARV just to get your business. This is why it is important to get a second opinion from another expert broker. If you begin your house flipping process with the end in mind, you will be setting yourself up for success. If you use the above tips, you will have a highly successful house flipping career.