let’s talk: I WANT TO FLIP A HOUSE- HOW DO I KNOW WHICH PROPERTY TO CHOOSE?
This past week or so I have been working with a couple who is ready to dive in and do their first flip! We have been looking at various properties but I think we have it narrowed down to one. I thought it might be helpful to show you how we got there.
So, as we do, let’s talk Real Estate, let’s talk I WANT TO FLIP A HOUSE- HOW DO I KNOW WHICH PROPERTY TO CHOOSE?!…
(1) SELCT THE “RIGHT” LOCATION
Choose the market you want to hit.
If you are looking for short term gain? Find the worst house in the best neighborhood.
Okay with holding for a bit before selling? Find an “up and coming” neighborhood. Be the first, second or third person there. When we bought our Philly reno – we were the only property on our block renovating. Now just 2 years later… there is construction EVERYWHERE you turn in that part of Philly. We got kind of lucky but also took a huge risk by going this route!
For these clients, they narrowed it down to a few zip codes they were targeting and I set them up with one of our Portals so that anytime a property came on the market in that zip code – they were notified!
(2) CHECK YOUR COMPS – WHAT ARE YOU STRIVING TO ACHIEVE?
You want to look at comparables to see help determine what your END goal is.
– Has anyone else in the neighborhood recently flipped a property?
– What are your comparables? Aka, what after repair value are you trying to achieve?
– How long did the comparables sit on the market? Look at DOM aka days on market
(3) WALK SOME PROPERTIES
Before purchasing your first flip, I would HIGHLY suggest we check out the property out in person! This can help give you a better idea of what the neighborhood looks like, and what renovations truly need to be done.
Bring a contractor with you if possible!
(4) RUN YOUR NUMBERS
– How much work does the property need? Is this a cosmetic rehab? A full gut?
– How much will this cost you? Get MULTIPLE quotes. We received 7 full quotes on our last project and the totals varied by as much as $80k when looking at the “cheapest” vs the most expensive.
– How long will the renovation take?
– What are your holding costs? (i.e. taxes, insurance, utilities, cost of funds, etc)
(5) MAKE AN OFFER
Once you have done all of the above and are ready to make your offer you can back into the purchase price to see what makes the most sense for you! I feel like we should talk about how to back into this number next week…
Any investors on here have any other good tips for us on what to look for when purchasing a flip!?
|Happy Wednesday! & Stay Healthy!|
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