Timing on my first flip?

Question

So I'm ready to buy my first flip property, I have the money for the downpayment and repairs.  I'm wondering if I should wait a few months because real estate sales obviously pick up a lot in the spring time.  I also know that closing on a property and fixing it up can take longer than planned.  What is a good total estimate from making an offer to selling the house on my first flip, (3 months, 4 months?).

Michael Borger · Answer

If you can get your desired profit while selling at a slightly less than otherwise desired resale price, you can reduce your DOM and help ensure you won't be one of those 'stuck' properties.

Lynn McGeein · Answer

Asher, we buy and hold, not flip, but the longest time one of ours sat vacant was when we closed in mid-October.  It only took a week to fix it up, but sat vacant until January, longest by far, and it's a cute 3/2.5 single family with one of lowest rents in neighborhood, so we factor that in now and don't buy in the fall.   That same home hasn't been vacant more than 2 weeks between 3 tenants since then, so I do feel it was the time of year that made the difference.  They say there are fewer homes on the market that time of year to make up for fewer buyers, but I'd be very cautious of going through the winter vacant on your first flip.

James Vermillion · Answer

Personally, I would consider starting now if you know you can lock up a good property.  While there is some truth to the slowdown in the winter, we have still been able to sell properties if they are priced right.  I would think you could earn more in a couple months than you would lose by selling in the winter (in my market anyways).  Then you will have the first one out of the way and on to the next one sooner.   That said, the property would have to meet all other requirements!

J Scott · Answer

We sell a lot of properties during the winter (though I'm in Georgia, and the winters aren't too harsh).  Generally speaking, most of the buyers shopping in December and January are serious about buying, and if you have a competitive product, you'll get sales.

Looking back through my data, it appears the typical DOM for properties we put on the market in November, December and January is 26 days, compared to 17 days as an all-around average.  So, it's a little bit slower to sell, but not tremendously so.

Something to consider:  It's generally cheaper and easier to buy in the winter months, and if you take a couple months to rehab, you'll be selling in the spring if you buy in the late fall or winter.  So, start gearing up to buy now, get something under contract in the next month or two or three, close in November or December, and then be ready to relist in the Spring.  Timing works out well for your first one or two projects (after that, you'll want to get your total hold time to under 3 or 4 months if possible).

JJ San Jose · Answer

There are many factors to deciding when to flip.... here are some:

Know your market and how long other properties are taking to sell.  You can easily find this out from the Days on Market (DOM) from the MLS or other affiliated sites.  Make sure these properties are comparables to the property you are going to flip.

The total amount of time you can expect will be based on (total time to purchase + total time to complete the rehab + total time to find the buyer + total time for the buyer to close).  Typically, the DOM is the total time to find a buyer and for them to close the deal.  But this can vary depending on when you put the property up for sale.

Some of us investors can get in and out of a deal in 3-4 months.  But during the off-season, i.e. winter months, it can take as long as 8 or more months.

You will need to factor that into your holding costs and if there is a depreciating trend for that area.  These factors will affect your profit margin.

These are just some factors to consider.

Best wishes on you making it a prosperous week!

JJ San Jose