Is House-Flipping For You?

by Ann Hayward 12/06/2020

Image by Andy Dean Photography from Shutterstock

In past housing markets, it was common for investors to flip houses. Unfortunately, when the housing bubble burst, many buyers couldn't update and sell the homes they'd bought. After a bit of a downturn, the trend has picked back up. However, savvy investors know that the housing market has much tighter margins than it has in the past. If you’re thinking about getting into the house-flipping game, consider the following tips as you get started.

Here are some tips to protect your potential investment:

Not every housing market is profitable: Many homes can be purchased, renovated, and potentially sold in every part of the country. But some locations do not have the sort of economic growth that makes property flipping viable. Know your market and local property values. Keep in touch with what’s happening in the community and be prepared with a plan B in case the home doesn’t sell.
Do your homework. There are fewer deeply discounted homes available to investors. Plan to pay the full price in cash but arrange a contingency to have the home inspected. If the inspection reveals issues, especially with primary systems such as electrical and plumbing, walk away. Or, offer the seller a lower price to account for needed repairs, and potentially get a better deal. Anything revealed during the inspection that the seller did not fix your responsibility to repair or replace before you can flip the property.
Respect your margins. Unlike in reality shows the profit made from buying and selling a home is not as large as it appears. When you find undervalued homes, you need a cushion built-in for the rehab. If the difference between what you paid and the new selling price is insignificant, it’s not a sound investment. Avoid purchasing property that requires thousands of dollars of repairs or upgrades. You'll end up with a lovely home, but little to no income to show from it.
Constantly monitor the inventory. Fewer homes on the market mean finding one with flip potential is more difficult.

Seek help from a professional

Maintain a close relationship with your real estate professional so that when potential homes come on the market, you’re the first to hear. Your real estate professionals know the local market. They watch the trends and know who is buying, who is selling, and who is holding. They also know which repairs and upgrades are essential to make a quick sale. Let them guide you.

Flipping

Home Renovations

Flipping Houses

About the Author

Ann Hayward

Born in Philadelphia and raised in the suburbs, Ann Hayward got her Pennsylvania real estate license at age 18 even before going to college. This second-generation real estate professional followed in the footsteps of her father and two uncles, inheriting their passion for the business. Licensed in DC, Maryland and Virginia, Ann is accomplished in her career, with numerous designations including SFR, SRES, PSA, WHC, and multiunit Housing Development Finance Professional (HDFP) from the National Development Council. She specializes in Prince Georges and Montgomery Counties, Northern Virginia and Washington, DC, all jurisdictions where Ann has lived and knows very well. In addition to her professional expertise, she owns and manages personal investment property, understands and has been involved in the renovation/remodeling process, and has great resources which she shares with clients. When you hire Ann to represent you, she will make your buying or selling experience an enjoyable, rewarding one. Her compassion, sensitivity to her clients’ needs, eye for detail, and ability to see the big picture when guiding you through a purchase or sale are unique assets that will ensure your success. A diverse and relevant background also gives Ann a distinct edge. For 30 years, she worked in fast-paced, high-pressure television and theatrical production, attaining the highest achievement – DGA membership as a Director, and as an award-winning staff and freelance writer. Her keen audio visual skills and design sense benefit sellers in marketing their properties, and are invaluable in helping buyers see the potential of space. A true renaissance woman, Ann was also an income tax professional and office manager for H&R Block, so she thoroughly understands the tax and financial implications of acquiring and selling real estate. Her superior organizational skills are further evidenced as owner of a downsizing/professional organizing business, Managed For You, which allows her to connect with everyone from millennials to boomers and seniors, whether for small space planning or assisting with major decluttering and transitioning. Ann holds an AB in American History from Simmons College, Boston, plus attended Robert Wagner Graduate School of Public Administration where she was a candidate for Doctorate. She additionally studied Film Direction at the American Film Institute in LA, and was a Stanford University post-graduate Professional Journalism Fellow. Personally, Ann is an avid if not very good golfer, and the co-founder of a nonprofit 501c3 organization offering educational guidance, tutoring and counseling for youngsters from elementary school through college admission. She sits on the board of trustees of a nonprofit educational film production corporation as well. (202) 494-6252 [email protected]