If you are a real estate investor looking to make money flipping houses, you may have found that competition is stiff in your local market. The US housing market is in need of more homes, and the low supply of properties drives up prices and makes it harder for investors to find houses worth flipping. Still, there is potential for a great return if investors are able to find a good home and capitalize on the high demand. In order to find success with home flipping, it will be necessary to come up with creative strategies so you can maximize your return. Continue reading as we cover the 7 things you should do to find success with flipping in today’s real estate market.
Understand the Competitive Landscape
The first step to a successful flip is finding the right market to invest in. Low inventory means you may not be able to find a home in your local market, so don’t be afraid to look into other promising areas. You may need to conduct research in order to find a market that’s trending upwards which can lead to lucrative opportunities. You should also have an idea of who your target demographic is so that you can focus on the data for that specific group. Once you think you have found a promising market, you’re ready to begin the search for a home.
Look for the Hidden Gems
The real key to making a good return with home flipping is by finding the hidden gems. In a competitive market, this means looking for homes in places other than traditional listings. You may be able to find a great deal by looking at home auctions, or by purchasing a foreclosed property. You will also want to work closely with a real estate agent as they can find you off-market deals and other great opportunities as soon as they hit the open market. Finally, don’t underestimate the power of networking; if you can get the word out about the type of property you’re looking for, you may run into somebody who’s able to help you on the other side of the deal.
Crunch the Numbers
Once you have found a property suitable for flipping, it’s time to run the numbers to determine if it’s a good investment. A good rule of thumb is the 70% rule, which says you should pay no more than 70% of a home’s After-Repair Value (ARV) minus the cost of renovations. This helps ensure there’s enough of a profit margin built into your deal that it’s worth the time and effort. However, first, you will need to have a rough idea of the cost of the renovations you want to perform on the property.
In a competitive market, speed is the key to being able to secure lucrative deals. Quick decision-making will be important, but so will having all your ducks in a row when the time comes to move on a deal. Ideally, you should already be pre-approved for financing, or at least have all documentation ready for the process of applying for a loan. It can also be good to have your contractors and other professionals on standby so you can move swiftly and take advantage of good market conditions before they change.
Maximize ROI and Appeal with Renovations
If you want to get the most out of a fix and flip investment, it’s all about choosing the right renovations. The changes you make to a property should add significant value while costing you relatively little in terms of investment. Some investors do this by focusing on high-traffic areas, namely the kitchen, bathrooms, and the living room. You can also get creative here and remodel the home in a particular theme or style to maximize appeal to potential buyers. By incorporating trends like open-concept design or energy-efficient features, you’re able to use them as selling points to help your listing stand out when it comes time to market the property.
Pricing Strategy: Be Competitive Yet Profitable
Choosing a good price to list your property at can be somewhat of a balancing act. You’ll want to list it low enough that you can be priced competitively, but also high enough that you can still make a decent profit. You should take a look at comparable properties in the same area as your investment to get a better idea of the price range you’re competing in. By selecting high-value, low-cost renovations, you can maximize your resale value since it leaves you with more of a profit margin to work with.
Make the Property Stand Out
The final strategy we want to cover is how to make your property listing stand out. A stellar listing is a sure way to get the attention of more buyers and possibly even increase your final sale value. High-quality visual content will be the key to this, so consider hiring a professional to take quality photos and give a virtual tour of the home that can be added to the listing. Once you have created a great listing, you can take marketing efforts one step further by posting in real estate groups on social media which can help you reach a broader audience.
The easiest way to save on your next investment is to obtain financing from a real estate lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. RCN Capital has competitive loan options available if you are looking to finance a home flip. Connect with us today to discuss your next real estate investment.