Every home flipper’s dream is to find a small mansion that just needs a few touch-ups before it sells for ten times your original buying price. While this would be the rare ideal opportunity for turning a profit on a single project, that is not the true purpose of everyday home flipping. In reality, most of your best projects will be small houses, old houses, and normal family homes that have been somehow mistreated over the years. And when you’re done, the home won’t be bought by a millionaire, it will be bought by a young family in need of an affordable starter home.
It may not seem like an impressive calling at first, but bringing starter homes back into the fold is one of the noblest achievements in the housing market today.
The State of Single-Family Homes on Today’s Market
Single-family homes are disappearing off the market like hot-cakes. But small nuclear families are no longer the primary buyers. Investment homeowners (landlords in other words) have become the primary buyers, snatching small affordable homes off the market to offer for rent instead of sale faster than most normal families can put together their pre-qualified mortgage paperwork. The homes they already own can be used as collateral to qualify for more homes, and their established income makes the rising interest rates easier to deal with.
This means that the ‘housing crisis’ as we are experiencing it is happening in part because homes for sale are quickly being processed into homes for rent. Many families that could afford a $50,000 to $100,000 dollar mortgage simply can’t find or close fast enough on the homes that become available. Especially if they are limited to an area where they already work.
Of course, you may be wondering what all of this has to do with your next flipping project
Flipping Starter Homes
The answer is that home flipping can make the difference. There are thousands of homes out there that are too old or currently in too poor a condition for investment buyers to bother investing in. Homes built 50 to 150 years ago, very small homes, and homes that have been wrecked by squatters may look hopelessly unlivable to move-in-ready buyers. But to a flipper, these are starter homes just waiting to happen.
As a professional flipper, you know that if the bones are good, a few panels of new drywall, coats of paint, and new appliances can make a world of difference. And families desperate to escape the treadmill of home rental will be happy to live in a small two-bedroom built in the 1940s if it is cozy and all the home systems work correctly.
Investing in a Renovated Starter Home
Interestingly enough, what this means for home flippers is that it becomes easier to build your flipping vision. Instead of dreaming about how to flip an old or small rehab into something investors or vacation home buyers would dream of, think modestly instead. Set your mind to rebuild a flip into an ideal family home instead of an opulent cottage. Think about floors that don’t scratch, chip, or dent and are easy to clean. Counters that can withstand hot pans and knife slips instead of marble or granite.
Investing in a starter home flip doesn’t have to break the bank and you will guaranteeably make a tidy profit when the materials you choose are affordable and family-friendly instead of taking a gamble on pricy upgrades. If you add appliances, choose appliances that are known to last a long time without worrying as much about how shiny and sleek they appear to be. And then use this wise choice when marketing the home.
Not only are you more likely to attract practical families looking for their first welcoming starter home, it will also be easier to visualize and finance your entire flip plan.
Marketing to Small and Growing Families
Then there is the final stage of your vital contribution to the housing market eco-system. The heartwarming dream of any flipper is to see a home they have renovated occupied by a growing family that is delighted to live in the recreated space. So market carefully and work with a real estate agent that will help you find a family looking to buy. When you start getting bids, consider prioritizing offers from a family ready to escape the rental world instead of an investment buyer looking to create more rental housing.
Be patient about newcomers to the housing market as they figure out how to jump through the necessary financial hoops and soon you can sell your starter home flip to a family that will personally appreciate every warm and practical improvement you made.
Flipping is a vital part of the housing ecosystem because you can bring seemingly unsavable homes back into the fold. And in a housing crisis, there is no service more valuable. While you may always have your eye out for that big-profit mansion that just needs a few touch-ups to sell for big bucks, remember the value of rehabilitating starter homes for individual families as well. These can be simple projects, easy to visualize, affordable to flip, and ultimately rewarding to sell to a family that will enjoy benefiting from your hard work. For more home flipping insights and funding for your next project, big or small, contact Center Street Lending today!