11th Jul 2010
How To Find Profitable Deals When Flipping Houses
Even when the housing market is slow, flipping houses can be a profitable business as long as you identify the right houses to buy.
Here are a few things to look out for when looking for investment properties.
Obviously you can never go wrong when you buy your houses low.
In order to determine if a house is a good investment, consider these points.
1) Extent of repairs
Most houses for flipping need repair.
It is important to assess the depth of repairs that need to be done and a fair estimate of how much it will cost.
If you determine the fixes needed are mainly cosmetic, you probably have a good deal.
Unexpected or major repairs can eat up your profits quickly.
2) Budget
Can you fix it without getting out of your budget?
Sometimes, it possibly will be essential to carry out an inspection even for a house that needs repairs to find out if you might want to do structural repairs such as plumbing, changing walls and so on.
3) Time frame
Can the changes be completed within an acceptable time-frame?
Will the changes increase marketability and selling price?
Speed is necessary when flipping houses so costs remain low.
You must aim to spend as little as possible, make your profits and proceed to the next deal.
4) Hiring contractors Vs doing it yourself
Even though flipping houses involves wholesaling them to other rehab real estate investors, it may be necessary to assess the type of rehab that needs to be done and if you can do it yourself if necessary, or hire a contractor to do it for you while keeping the carrying costs low.
5) Neighborhood
Avoid low-priced areas or war zones.
You must also stay away from expensive neighborhoods when flipping houses.
Staying within the medium price range will not only give you more deals, but your properties will be more marketable.
Does the house look similar with other houses in the same neighborhood?
Does its size compare with other similar houses?
These factors make it tough to sell and leave little profit for you.
Stay within the median in that neighborhood to be most safe.
6) Comparable sales
Do similar houses sell at a price that leave a profit for you?
It might seem like you have bought it low enough, but comparable sales in the area might prove you wrong.
It is safer to have conservative estimate of the fair market value when buying houses than make end up making a loss because houses in the same market have not been selling within your price range.
7) Demand for the property
Even in a depressed real estate market some neighborhoods are more marketable than others.
Is it near important services like schools, hospitable, shopping, recreational facilities and others that make it more appealing to buyers?
This will make you sell your house fast.
Whether you plan to flip the house to another investor or do the repairs yourself, these are important factors to consider that will make your house sell faster and move on to the next deal.
Simon Macharia invests in real estate in Dallas Texas and runs his business from a real estate investing website that also automates his business. Click here to find out how to can automate your business and make more while spending less time and money.