Spotting the Best Property for Buying and Flipping
There’s no denying the property market is seeing some pretty outstanding gains in the last few years – which makes the notion of flipping homes for a tidy profit all the more enticing.
This can be a demanding industry to get into, and it certainly doesn’t pull any punches in punishing the unprepared. Property is capital intensive – or in other words, moves huge sums of money around – and getting caught short could be a risk few are bold enough to take.
The secret? As with so many things, it’s all about going in prepared. Making the most effective flips means understanding the best kinds of properties to look for. Get some of our expertise in hand, and you’ll be flipping with the best of them in no time.
Don’t be afraid to micro flip
Micro flipping, especially for beginners to the property industry, can be a great place to start. As the name implies, the profit margins could be slimmer than you’d like here – but that’s because the level of work you have to put into micro flipping a property is pretty low.
Micro flipping works by picking up a property at below market value that needs minimal renovation work and flipping it for a tidy profit in short order. It’s less demanding and less risky, as long as you know the right approach.
It’s not just the house – it’s the land
So much of the talk in the property market gets caught up in aesthetics and curb appeal. If the wallpaper is shoddy, who cares? If the carpets are old, so what?
These are all things that can be changed – and naturally, doing so will help you flip that house for a good profit. The real value proposition lies in the size and location of the land that your property resides on.
We all want to live in nice neighborhoods with good access to amenities, of course, but that’s not quite our focus here. The size of the land is where the real profit margins lie – and anyone who can pick up an old house with bad décor on a sizable piece of land is in for a treat when the time to flip hits.
What skills can you add to the project?
Budgeting to flip a house is all about minimizing your expenditures on the place, all while cashing in on the best renovations and repairs possible to make your bank balance sing when the sale comes through.
That means taking a good long look at your own capabilities, and how those translate to the property you’re intending to turn around. If you know you have the handy skills, electrical qualifications or plumbing knowledge to turn a property around – skills not many others have or have to invest in contractors to secure – you’re ahead of the game.
If you or your loved ones are willing to put expertise in for free, do so. It’s going to be tiring and tricky at the time, but it’s saving you a small fortune in the long run – and will translate into profits when the time comes to flip that home.
What customers are you going to sell to?
Like any other kind of business, flipping a house means understanding not only the kind of people to whom you intend to sell a property – but also their needs, desires and that all important purchasing power.
Let that thinking sink in as you evaluate not only the property you’d like to buy, but also the neighborhood and district of town it’s in too. That’s going to inform you who is going to buy the house when you flip it, as well as what kind of spending power they will have.
For example, a property near major traffic routes or railway lines will be more tolerable for first time buyers, like couples or single professionals. They might even appreciate the ease they have in getting from place to place, and will oftentimes be more tolerant of any ambient noise.
However, those buyers will also have smaller budgets, so make sure you factor that in. The opposite is also true – a remote country home or somewhere right on the edge of the suburbs will attract buyers with bank balances plump enough to afford such privacy, but they are going to be more demanding that their new home is finished to a higher standard.
That could mean a bigger investment from your side at the start of the whole project, with smaller margins for error. Plan accordingly!
Learn what’s cosmetic and what’s structural
More often than not, picking up a property to flip means grabbing a home that’s seen more than its fair share of wear and tear – and then some. Yet these kinds of properties, as much as they command bottom of the barrel prices for looking ropey and creaking disturbingly, might not be the ordeal to fix up and fix that you might think.
The key to success here is knowing when a property is being marketed for a low price because its internal décor and external appearance is shoddy, versus when there are genuine and legitimately hazardous faults with the structure or wiring of the house.
The favored kind of house here is one where it’s just in terrible shape to look at, of course. If everything works as it should and the structural integrity is intact, this kind of house is a flipper’s dream – some renovation work and a coat of paint means it’s good to go in short order.
Nonetheless, you can get caught short if you’re unprepared here too – many a flipper stumbles upon a structural issue late in a project they thought was a one and done renovation deal. It always pays, perhaps even literally, to budget for the unexpected.
House flipping is an exciting and challenging space to be in, and in a market like ours, it can create some incredible success stories to those who know what best to look for.
Need a helping hand? HomeRX is always here to help with expertise and tips aplenty. Now get flipping!