I met a lovely couple this week that are eager to flip houses. Seems like a good idea, right? It depends.... on a lot of things.
Here are a few questions that I ask new clients who entertain the idea of fix-n-flip
This particular couple did have a good understanding of the local real estate market and a realistic expectation of perceived profits. They asked a lot of great questions and have a network of professionals to call on.
I don't recommend flipping for everyone - it's like someone on HGTV said - it's not flipping, it's speculating!!
I am a full service, full time career Realtor. I specialize in Residential resale representing both buyers & sellers. I enjoy assisting and educating my clients to create a fantastic experience!!
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Melissa, flipping isn't for everyone but a lot of things aren't. I think it just comes down to us doing our job and educating our clients on what they are doing, and it certainly helps if we have done it ourseleves.
If rents will hold the property until the market improves, they may do well (if appropriate financing is in place).
given the current maket conditions in many parts of the country, flipping is more risky than ever. It take a sophisticated buyer.
Hi Melissa,
The most common issues that I've run across with some of my clients and friends who flip houses are; 1) They can easily blow their budget (instead of updating the place to their style, they should keep costs down and go with more economical choices for appliances), or they run out of the necessary funds to carry the home each month until it sells, a few have overpriced their properties instead of keeping them 1 or 2% below market. Then there is the tax consequences that come along with it...it's best to do a 1031 exchange whenever possible.
Those are just a few things that popped into my head when I read this thread.
-Keith
RE/MAX Olympic, Manassas VA
www.MyRealtorKeith.com
Melissa, It was interesting to read this. This couple seems well equipped to take on a flip and I know someone who does it. Their homes sit on the market longer but they DO sell and he makes a really nice profit.
Melissa - Great input except I'd modify #6. It shouldn't be do you plan on pulling permits, but do the improvements require permits? This will affect your ability to sell your flip, and your bottom line.
Brian - Experience or the willingness to listen to experience is the key.
Roberta - these are investors who want to flip to sell - not rent. Both are popular, but they take different approaches, for sure.
Joan - you are right on! It is risky .
Keith - pricing just a tish below market is a really smart move. Thanks for sharing.
Carole - knowing how much time they can hold a property is important and does affect the budget.
Heather - my #6 comment was stated that way because in our area, a lot of repairs do require permits, but many investors won't pull them and uses unlicensed "cheap" labor. This might be a problem down the road. Before I take a re-listed property, I want to know how they operated the flip process.
Thanks everyone for giving comments. I learn so much from AR!! Make it a great day!