Michael Candelario, Arizona resident, discusses top 5 tips for flipping houses.

While the pandemic slammed the door shut on many businesses, it kicked them wide open for many new homes.

Renovations and flipping, especially, saw huge growth as homeowners were stuck inside with more disposable income. First-time flippers sought to capitalize on this opportunity. Although it can be lucrative, flipping houses also brings risk.

With inflated prices and tighter margins, Michael Candelario shares his experience by offering five lessons for any first-time flipper.

Set a budget

Flipping houses shouldn’t be just a hobby. The goal is to generate a profit, says Michael Candelario. The logical first step is creating a financial plan. An accurate budget accounts for several factors. Consider the project’s location, the overall market, acquisition costs, and the amount needed for renovation. Include extra funds for delays and other unaccepted expenses that will inevitably pop up.

Even more importantly, stick to your budget. Don’t over-commit. As with anything else, Michael Candelario practices disciplined spending. Avoid sinking money into a property that is already over budget. Sometimes the best move is to get out, cut your losses, and move on.

Complete only needed work

Over-rehabbing can kill your budget. In fact, it’s the most common additional expense. Attracting buyers and turning a profit are your sole purposes. These drive any decisions regarding improvements. Luxury amenities and high-end furnishings may look nice, but may actually be doing more harm. Fight the impulse to over-fix by ensuring your house reflects other homes in the neighborhood.

Allocate enough time

More than any other real estate project, flipping requires huge investments of time. As an entrepreneur, Michael Candelario understands the role of time management and juggling several tasks at once. Demolition and construction, when done yourself, always take more time than anticipated. If hiring contractors, plan time to meet, schedule, and coordinate. When finished, inspections, showings, and closings also require time. Leave room for delays.

Delegate difficult tasks

Performing a flip seems much easier on paper than it is in reality. Most beginners fall victim to valuing their own skills too highly. Labor is often the first cut made by developers. Yet skill and knowledge may be lacking if you attempt to do some work yourself. Get help. Hire the right people. Don’t try to learn on the fly. Surround yourself with workers and employees that can help the project flourish.

Establish an exit strategy

The work isn’t complete unless you can hang a “sold” sign out front. Just like when creating a budget, Michael Candelario also builds an exit strategy. Whether it’s renting, leasing, or selling, you must monetize your project. Identify several strategies at the beginning, allowing you to adapt if needed.