One of the most important parts of being a house flipper is finding the right properties to invest your money into. By purchasing the best homes, you will see a good return on investment and be able to build a lucrative career. As you gain experience, it will be easier to pinpoint the best properties because you’ll know what typical repairs cost and what features are most desirable to buyers.
If you’re just getting started in the house flipping journey, here are five features that indicate a valuable property.
1. Good Bones and Foundation
A home with “good bones” has the potential to be a great investment. These homes require some work but feature a quality, well-made construction and sturdy foundation. Homes that are rough around the edges are great fixer uppers, but do avoid those with structural problems because they will significantly cut into your profits.
2. Safe Neighborhood
Neighborhoods change, so it’s important to do your research and know what type of neighborhood you’re buying into. If you buy a fixer upper in a lower-income neighborhood, there’s only so much money you can make. For many house flippers, it makes sense to buy rundown properties in safe, family-friendly communities.
3. Desirable Setting
In addition to the neighborhood, pay attention to the setting the home is in. This refers to the features nearby the property, such as restaurants, parks, coffee shops and golf courses. Buyers like having these types of amenities nearby as well as close proximity to major highways. On the other hand, properties that are near railroad tracks, airports, power plants, factories, etc. are worth less.
4. Only Cosmetic Improvements Needed
As you gain experience in this industry, you’ll develop relationships with contractors and be better able to estimate what the costs of repairs are. But for now, focus on real estate that only requires cosmetic changes. New cabinets, countertops, flooring, paint, light fixtures, etc. are relatively easy and inexpensive in the grand scheme of things. Structural problems, old wiring, plumbing issues, water damage, etc. may cost more to fix than you can sell the home for.
5. Weak Competition
It’s always nice to have comparables to look at when pricing a fix-and-flip, but be aware of the competition you may have. If you buy a home in a neighborhood with lots of other properties for sale, you may have a harder time selling yours. On the flip side, if you’re one of the only investors selling in the area, your home will be very valuable.
When looking for properties to invest in, do your homework and consider the five features above. Once you sign on the dotted line, you are committed to the project. To secure financing for your next fix-and-flip project, contact First Funding Loans today.