Flipping a house requires you to do a lot of things just right.
And this includes identifying a house that has some hidden value as well as looking for certain core features.
The “gurus” all claim that you make all your money the moment you sign the paperwork and officially buy the house.
True…but having said that, none of that really matters unless you know what to look for in a house.
Although this list below is not exhaustive, there are five features that can tell you if a house is “the one” – but bear in mind, that doesn’t mean that you should purchase property solely based on these features.
Remember that you should never overpay for a house and always remember the house flipping rules. If the numbers don’t work, better move on to the next one.
Bear in mind, we break these rules sometimes when the numbers are stupidly silly good…but those deals don’t come up all the time…so keep these five things in mind when you’re first starting out flipping houses.
How to Estimate Rehab Costs!
Estimating rehab costs accurately can make or break your real estate business, and it takes years of experience for even the best rehabbers to master the art. However, you can expose yourself to less risk and get more accurate with your projections by learning how the pros think when estimating construction costs.
1. Major Structural Problems
Yes, house flippers make money transforming shabby looking houses into something esthetically pleasing. It’s one thing to fix a few broken windows, fix peeling paint and revamp a driveway but structural problems are something else.
Not only is fixing them costly but it means you will be rebuilding the house. A shabby looking house with no structural problems has more value than a neat looking one with structural problems.
Leave the houses with serious structural issues to a house flipper with more experience…as these are real gems. When you’re first starting though, avoid the ones with cracked foundations and serious environmental issues.
2. The Location Of The Property
The location of the property is important because it will determine how much the house will sell for. If you choose to buy property in an impoverished neighborhood, you can only make so much from a house flip.
The best scenario is buying the worst looking house in the best looking neighborhood. Tougher to find, but these are the really good buys.
Sometimes it makes more sense to buy property in a good neighborhood where you can increase its overall value to meet the standards of those around it. These are the ones that likely have more competition, but are worth it as long as you keep your ARV in mind and really know your numbers.
3. Features Near The Property
Certain features make the value of a property fluctuate as well.
These can include proximity to heavily trafficked areas, factories, power plants or newly developed commercial areas. Desirable settings would be lake front or beach front property obviously.
Although you may not be able to snag a beachfront fixer upper on your first flip that fits your numbers, you want to stay away from nearby features that may delay the sale of the home.
After all, the faster you can sell, the more profit you make.
4. Reputable School District
For most of our flips, we sell to first time homebuyers. This may be couples with kids or with kids on the way, so school district reputation is an important selling feature.
Most families looking to buy new homes have at least one child or are planning on having one, so they are likely to look for a house in a reputable school district. Reputable school districts increase the value of a home significantly so this should also be one of the things you look for when looking for a house to flip.
A reputable school district can also be a deciding factor when you have two houses in different towns going for the same price. Even though sometimes you may not have a choice and you have to choose whichever real estate deal you get, you should know that property prices change because of the reputation of the school district.
So make sure you understand these things before you buy.
5. Less Competition
Finding deals that other real estate investors don’t know about is a huge key to our success.
We use a variety of old school and new school techniques to find properties other investors simply don’t know about or simply wont touch.
If there are many other investors all bidding ont he same property that you are, you’re likely to get outbid and not make the number work. If you go direct to homeowners, this changes all of that.
If you’ve gone this far, please leave a comment below! What other things do you look for when you search for flips? Let me know by making a comment below!