If you are a fan of HGTV, then you may think that flipping a house is a fast and easy way to earn some money. Although it is possible to make a great ROI on a flipped home, it isn’t as easy as the TV shows lead you to believe. That’s why experienced flippers pay attention buying the right home in the right place at the right time.
To do this, seasoned investors look for the following:
Tip #1: Find the Right Neighborhood
It is important to look for homes that can sell quickly. Flipping a home requires that you renovate and then sell as quickly as possible. A good portion of the profit you make comes from speed because the faster you sell, the fewer overhead payments you will need to make.
On average, homes remain on the market for 62 days. The best homes to flip are in neighborhoods below the average.
You’ll also want to be sure that the neighborhood is up and coming, not needing its own flip. Look for amenities like public transportation, parks, shopping, and a good school district.
Tip #2: Find the Right Price
In order for a flip to be worthwhile, you should be able to make at least a 10% ROI. Getting up to 30% is even better! The best way to have this happen is to buy the house for about 70% of what it will be worth once the renovations are completed minus the fees and costs associated with fixing up the home, such as closing costs, agent fees, and repair costs.
For example, if you buy a house for $100,000 and put $30,000 into repairs and closing costs, then you will want to sell the home for between $145,000 for a 10% ROI and $185,000 for a 30% ROI.
Of course, it will be imperative that you understand how much the house will be worth once it is renovated. One easy way to get a ballpark figure is to check the median prices for homes in that neighborhood. However, this would assume that you have an average house.
Tip #3: Look for the Right Home Features
The average home buyer is looking for certain things in a home. Since you are trying to appeal to as many buyers as possible, you will want to find a home that is appealing. What are buyers looking for?
· 3 bedrooms
· 2 bathrooms
· Functional floorplan
You will also want to find a home where the repairs are mainly cosmetic. Such renovations include:
· Updating kitchen and/or baths
· New flooring
If the home you are considering has an old HVAC unit, you will want to replace it. If it is too expensive to replace, then you will want to move on to another house. Buyers are scared of old furnaces. The same is true for roofing, electrical upgrades, and plumbing issues. In general, it is also best to avoid houses that need foundation or structural changes.
If you look at a home with these three main tips in mind, then you should be able to flip and bring in a considerable ROI. If you have questions about flipping a home, feel free to contact me. I’d love to lend you a hand.