Flipping Make or Breaks

Flipping Make or Breaks

In 2005-2007 the word Flipping had a bad connotation and in some circles it still does.  In those days flipping meant buying a house and putting very little into it and selling it for massive profits.  Today, there are rules in place to protect the consumer and flipping has taken on a totally new meaning in the Real Estate Investing world.  There are many opportunities for people to purchase properties in need of love, renovate them and then resell them and put them back into useful service.   However, there are some things you need to keep in mind when you start renovating homes for profit.

I was inspired to write this blog by a post by Michelle Gibson at Hansen Real Estate Group in Wellington Florida.  She did a great job talking about flipping properties in her Wellington, Florida market.   The markets are different in different regions so I put my own spin and my own experience on the line here.

You really need to consult with a professional.  Many people think they can do this by themselves or by looking online and using sites like Zillow, Trulia and Realtytrac and forego the services of a Realtor, however, you really shouldn’t.  A Realtor will show you homes, preview and prequalify homes and research after repair value.  A Realtor will also know what’s selling in your neighborhood and for what price and they’ll be familiar with your competition.  Sure you can buy a house for $7,000 and you can renovated it with all the bells and whistles but no amount of lipstick on that pig will make it worth $500,000 if the house next door is selling for $50,000. 

Don’t skimp on the details.  While your buyer might fall in love with that brand new kitchen with granite countertops and stainless appliances don’t forget to replace the 1970’s brass light fixture in the dining room and the cheap aluminum blinds because the money ran out.   Buyers are picky and they won’t overlook things like that.  They’ll also want to see an updated bathroom.  And, don't forget the exterior of the house either.  I once visited an absolutely gorgeous home (on the inside) but my buyer decided against buying it because the yard was overgrown and hadn't been improved at all and the seller had no intention of doing anymore to the home. 

Have your Realtor show you your competition and understand what finishes are popular in the current market.  Brass is out, just because it’s cheap doesn’t mean someone will buy it.  Plan your renovation based on what is selling.   Know what the market wants.  I made the mistake of buying a house without a basement to flip once.  In North Carolina that wouldn’t be a bad thing because most homes don’t have basements in North Carolina but in Maryland most homes do have basements and the biggest complaint I heard from prospective buyers was that it didn’t have a basement and as a result it sat on the market for far too long and it sold for less than it should have. 

 

Don't underestimate the value of staging!!  Statistics show that homes that have been professionally staged show better and seller for up to 10% more than homes that aren't staged.  Include the cost of staging in with your renovation costs or ask your Realtor if they will at least lightly stage your newly renovated project for sale.  I do have a limited supply of light staging items just for that purpose and provide these at no cost to my sellers.  Having place settings on the breakfast bar and a shower curtain in and towels in the bathroom can make all the difference  to a prospective buyer.

Over improving a home is probably one of the biggest mistakes most Investors make.  This is where you really need to depend on your Realtor for advice and helping you pick the right property and helping you pick the right improvements to make your flip a success.  Some Investors will let their personal taste get in the way when they start renovating a home.  I once worked with an Investor and I made him promise not to buy anything without me being there.  I was a few minutes late one day and made him put everything in the cart back on the shelf because he had picked very ornate Italian Renaissance style light fixtures for a 12’ wide row house renovation. 

Don’t Over Price Your Home to make a certain profit.  My office manager always says “Pigs get fed, hogs get slaughtered” – don’t get greedy, you don’t need to make $1,000,000 on a flip.  It’d be nice if you could but gear your profit based on the purchase price, renovation costs and time involved and be sure it makes sense.  Keep in mind, the longer your renovated home sits on the market the more $$ you are losing – time is money so don’t be afraid to adjust the price to get it sold.  Always keep in mind your holding costs. 

If you are considering flipping a property in the Greater Baltimore area please give me a call or drop me an email.  I’m happy to talk about my own experiences flipping properties and help you through your own projects.                                                                                                                           

 

If you are thinking of buying or selling an home in  Maryland give me a call at 410-292-0100 or start your search here and we'll talk about the market conditions and what your home could possibly be worth in today's market place if you are thinking of selling. If you are considering buying a home, there is no better time than now to buy. The tax savings and wealth building alone is worth the plunge into todays market.  Century 21 New Millennium is part of the largest nationwide relocation company and can assist with your move here in Maryland or anywhere in the United States or abroad.  Ask me how.

In keeping with saluting our heroes, during 2013 I am waving flat fees for active duty military, retired military and the families of fallen military, as well as policemen, firemen and emt's. If you enter into a contract by the New Year's eve I will waive the flat fee at settlement. This is a $395 savings. If you are thinking about buying or selling a home give me a call and receive full service real estate assistance from an experienced agent. Our office is open 7 days a week and we can be reached at 410-730-8888 or I can be reached directly at 410-292-0100.

June Piper-Brandon ~ Associate Broker, CDPE, CIAS, ePro 

Century 21 New Millennium - #1 Century 21 in the World