Should I stay away from expensive flips?

2 Replies

The reason I ask is because FHA only loans up to $294,000 in my area. If I went above this, would it take a lot of buyers away? How do the averade Days on Market compare with these higher-end SFH's?

I typically always recommend sticking with properties that will be open to the most amount of loan types. This keeps your pool of buyers larger. This is a general rule and would depend on your market. If the higher end homes with limited loan types are what is selling then that may be the right move in your area. 

I also try and stick with homes that if they don't sell, if the market turns upside down, etc... They can be rented out and at minimum pay for themselves. In most markets this rules out higher end homes, but many investors don't factor in this rule, but I like to minimize risk as much as possible. 

Hope this helps! Aaron

@Patrick Philip it depends on a lot of factors. 

1. If you have the financial means to hold the house longer and the margins are good, high end flips can be good.

2. If you are just beginning with flipping, stick to the lower priced homes

3. If you want to get in and get out fast, stick w/ lower priced homes

All the best!

sjw