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With real estate,  "flip" has become a popular buzz word.  That said,  it is easy to get caught up in the hype.  With popular television shows focusing on this segment of the market, to seeing the neighborhood you live in change, you may have become interested in testing the rehab and sell, or "flip" market.  Before you jump into buying a house, making some repairs, with the hopes of living for a year off of your profits, read this article, and do further research.

The easy buy it, fix it, sell it scenario seen on some of today's popular television shows, may just be staged, or completely acted out.  Click here to read about charges filed on a tv show "flipper" who was recently charged with fraud. Not only were the properties borrowed for television, but the detailed work shown on the show was never done-which means the cost to rehab, and the profits were all fabricated. Always keep in mind, on television, especially "reality" tv, nothing is as it seems.

On the other hand, smart real estate deals can provide plenty of pay off, for the educated, and patient patron.  But, be cautious, and treat each prospective purchase with care.

Here are a few common things to remember to keep your flip from becoming a flop.

1. Research and Plan.
These can't be stressed enough.  It is important to know exactly what your objectives are, before you even step foot into a neighborhood.  Besides location, size, price range, comparables, resale values and cost of construction, you need to know the answers to what/when/why and how as it relates to the project you prepare to undertake.  There are some excellent books on the market to get you started that I will review in an upcoming book review.  There are also a couple of shows on television that will give you an idea about the process, but remember, some shows are staged, so be careful.  If you are anxious to get started, and want to know what books to pick up, or shows to watch, send me an email.

2. Budget.
What are your costs? How much do you want to pay for the property?  Are you using financing? What will the interest rate be? How much work does the property need? How will you afford to pay for the work being done?  How long will it take the property to sell, once finished?  These are just a few questions that should be asked and answered before you make a purchase.

3.  Build a Team.
If you paid close attention to the points above, you may have begun to realize that you will need help.  Having a good real estate professional on your side can help you find out detailed market information you need on neighborhood, sales, before rehab values, after rehab values, etc.   You may also want to talk to, and work with a few contractors, or handymen.  Walking through properties that need work with a contractor will allow you to see what they look for in terms of repairs, and give you an idea of how much you will need to budget.

4. Window Shop.
If you have never rehabbed a property before, the easiest way to begin to feel out cost is to talk to someone who estimates construction work for a living.  However,  you can also go to your local home supply store, and just note prices for little things like light fixtures, paint, flooring, etc.  If you take a few notes, you will learn how much  the materials cost, and therefore better determine if you are being ripped off in labor costs.

It will also help to visit rehabbed properties in the area where you want to rehab. You will be able to see what kinds of materials are being used, and gain knowledge on your "competition".

5. Expect the unexpected.
Once you have done your research, have a team, created a budget, and feel confident enough to leap, remember that there will always be something unexpected.  Whether you have to spend more for the construction than you thought, or the property just doesn't sell as quickly as you would like it to, always prepare (financially especially), for a curve ball.