Fixing and flipping houses is a great way to generate income, whether you take it on as a full-time task or use it to generate extra funds across the course of the year. However, In order to reap all of those benefits, you need to choose the right house. Finding the right house to flip includes a number of key elements.
Check the Neighborhood
When you’re looking for a house to fix up and flip, the best way to start is to check the neighborhood. A neighborhood where all of the houses are rundown and no one is making an effort to fix them up won’t be able to support the purchase price of a home with many renovations and you may not be able to make as much money back as you think. You should also check to make sure that well-maintained homes throughout the area are selling quickly, efficiently and not lingering on the market for a long time before they finally move. A great fix and flip property will sit in a neighborhood that is being restored over time. You may see plenty of construction going on throughout the neighborhood. Also, make sure you check for things like:
- Train tracks, which could identify noisy trains that move through the neighborhood on a regular basis
- A underdeveloped house right next door to the one you’re planning to buy
- Noisy or aggressive dogs close by, especially those that are not confined to their own property
- Busy streets with lots of traffic, where it might be more difficult to sell family homes
Choosing the Right Property
You’ve examined the neighborhood, and you think you’ve found a great property to flip. Next, you need the right house: one that has great bones and will be easily fixed up. Chances are, a few coats of paint won’t be enough to transform a house and make fixing it up worth your while, but you can look for these key characteristics in the house you’re planning to fix up.
- It doesn’t need extensive electrical work. Wiring should be generally good, with no obvious fire hazards throughout the house.
- There’s no mold or water damage, at least not that you can’t fix up easily. Keep in mind that water damage leaves obvious signs even after it’s repaired, and many buyers might not want to deal with the possibility of further damage in the future.
- It’s about the same size, or perhaps a little smaller, than other houses in the neighborhood. Choosing a house that’s the right size will help prevent it from sitting on the market for a long time after you’ve fixed it up
While it’s not a must-have, looking for a house to fix up that has no curb appeal can go a long way toward making your fix and flip easier than anticipated. Many buyers will struggle to look past an overgrown yard or form an opinion of the house because of its poor exterior paint job, both of which can be fixed up fairly easily and inexpensively for considerable profits.
When you pick up a house to flip, your goal is to choose a house that you can afford, then do the renovations on, without exceeding its probable purchase price. This isn’t a home you’re planning to live in; rather, it’s an investment that you’re making for a profit. Avoid paying market value for the house that you’re planning to flip. Instead, look for foreclosures, houses that are being marked down for quick sale and other less-expensive homes. If possible, have your contractor go through the house with you before purchase to prepare an estimate for the cost of your repairs.
Fixing and flipping houses can be a profitable business, but it’s important to approach it as the investment it is. If you need help securing the funds you need for your investment, contact us today to learn more about how we can help.