How To Make Informed Decisions About Choosing A House To Flip

by Ann Hayward 04/04/2021

Selecting the right property for a fix-and-flip requires entrepreneurs to account for wide-ranging elements. The real estate market remains chock-full of properties in need of renovations that could make them a valuable commodity.

By that same token, a house-flipping professional must purchase a property that delivers a substantial return on investment and does not linger on the market. When house flippers choose poorly, they can suffer significant losses. To avoid an expensive trial-and-error process, house flippers may want to consider the following ways to evaluate properties on a case-by-case basis to make informed decisions.

Location, Location, Location Can Be Complicated

When real estate agents sell homes, they think in terms of location differently than house flippers might. Proximity to shopping restaurants, high-rated schools and low-crime areas remain essential in selling existing homes and new construction projects. For the house flipper, other considerations may also be pertinent.

Neighborhoods occupied by predominately young professionals and remote workers can open your venture to a niche demographic. The Hipster subculture, for example, carved out communities of their own that attract like-minded buyers. Certain locations don’t need to be near excellent schools or mini-malls. Consider the location in terms of who would buy the home, how much would they pay and how quickly can you flip it.

Make Big Profits From Small Houses

Conventional logic would show that big houses have the potential to deliver larger fix-and-flip profits. That may not be the case. If you buy one of the larger properties in a neighborhood, then the comparable sales can push potential buyers to the high end of the area’s scale. In this scenario, the renovated home could sit on the market. Paying on remodeling loans and having your investment capital tied up can be counterproductive.

If you go in the other direction, it may be easier to turn homes over more quickly. A modestly sized property in a friendly neighborhood could increase the pool of buyers. That’s largely because you open the demographic to two ends of the spectrum — starter-homebuyers and retirees looking to downsize.

Consider Properties With Terrible Curbside Appeal

Nice lawns, perennial gardens and ornamental trees make a front yard look fantastic. They also tend to drive up property values. A blighted front yard, by contrast, drives down the cost of the house you’re looking to buy and then flip.

Landscaping can be one of the least expensive upgrades. House flippers can roll up their sleeves and add plant gardens, hardscape elements and even plant a Dogwood tree in the front yard. Tear out dead clumps of grass and install turf, and the newly minted landscape can draw offers like a paper clip to a magnet. To make informed decisions, house flippers should embrace deficiencies they can fix with a little DIY sweat equity.

Not All Homes Age Gracefully

Historic and vintage homes may seem like a good fit for a fix-and-flip, but that’s not always true. If you select a home built in the 1800s that enjoys structural integrity, restoring it to its former glory may garner high profits. Fast-forward to the 20th Century and the pervasive use of lead paint and asbestos could render a renovation financially impractical.

Finding lead or asbestos can trigger safety and remediation regulations. You could find yourself calling a professional outfit to handle this costly aspect of the rehab. As a house-flipping professional, you want nothing to do with the sometimes astronomical cost of removing lead or asbestos. One general rule experienced house flippers adopt is never buy a house built before 1978.

In terms of making informed decisions, consider the home through the lens of cost-to-profit ratio and the ability to resell quickly. You’re not buying a dream home to put down roots in a community. House flipping is strictly business that paves the way for others to find the community they want to be a part of.

Homebuying

House Flipping

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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]