Ever since the market crashed in 2008, buying homes to flip and sell for a profit has increased in demand. Investors and entrepreneurs alike are taking advantage of the opportunity to flip homes for a profit. Flipping homes is a great way to make a large profit in a small window of time.
What is House Flipping?
House flipping is the process of buying a home in need of repairs, doing renovations and upgrades to the property and selling it for a profit. The homebuyer is typically a real estate investor with the intention of flipping and selling the property.
Can Anyone Flip Houses?
Not everyone can flip houses and make a profit. It takes someone who has access to financing, a strong business acumen and thorough real estate knowledge to successfully flip houses. Renovating and flipping houses is a time-consuming endeavor that takes money and real estate savvy to do well.
However, anyone can get into the house flipping business. You do not need to have a business degree or a real estate license to successfully flip houses. Understanding the real estate market and doing thorough research will definitely help! A good network of real estate professionals and access to financing can make your flipping goals a reality.
Finding Good Investments
Finding the right property for a house flip needs to be done with precision. First, get a real estate agent who knows the current inventory, market trends, unlisted properties. They will walk you through the process of identifying the property with the most upside. Not every home that needs repairs is worth the investment. Go look at homes with your agent and estimate the amount of work needed, the amount of time it will take to complete everything and how much it will sell for. Don’t forget to factor in closing costs and agent commissions in your calculations.
You can tell a good investment from a bad one by the extent of the repairs it needs and the strength of the real estate market in that area. Do some research before making an offer on a house and leave yourself a cushion for unexpected repairs and expenses.
Home Improvements That Yield a Strong Return on Your Investment
Most people believe that every home repair increases the value of a house. This is not true. Maintenance repairs such as replacing a roof or fixing the foundation do not increase the value of a property. These repairs are necessary to keep the value of the house from decreasing.
Home improvements that yield return on an investment are renovating kitchens and bathrooms. Homebuyers like to see these areas of the home upgraded are critical in getting top dollar. New flooring and carpeting also make a big impact on buyers. Always paint every wall in a home in neutral tones for a fresh and clean look. Painting is an inexpensive repair that really helps sell a home. And don't forget landscaping! The front yard is the 1st impression. Curb appeal gets buyers in the door.
Prime Los Angeles Areas for House Flipping
This year Los Angeles ranked seventh in the nation for house flipping activity. In fact, according to Redfin, three neighborhoods in LA were listed in the top ten hottest flipping neighborhoods.
The national average for a flipping profit per house is $102,400 and the following three LA neighborhoods well surpassed that number:
Mt. Washington: $312,000 (on average)
Silver Lake: $307,000 (on average)
Loz Feliz $241,000 (on average)
These are the prime areas in LA to flip a house today. Furthermore, Los Angeles in general yields a higher profit than the national average.
Using a Real Estate Agent During House Flips
There are many benefits to using a real estate agent throughout the house flipping process. They will save you time, money and headaches. They have the professional expertise to help you negotiate a lower price when buying and yield a higher price when selling. They can provide you with comparable properties in the area so you know what your competition is. They've seen successful flips and really bad flops. They can provide useful advice on how to maximize your investment.
Questions to Ask Your Realtor:
What are some comparable upgraded homes in this area?
What is the average length of time on the market for a house in this area?
What demographics of homebuyers can afford houses in this neighborhood?
Some other real estate professionals to build a network with: