Quick Flip: Is Now the Moment to Buy, Improve, and Sell?
All of a sudden there are not enough houses for sale to meet homebuyers’ rising level of demand. Could you pull off a fast-and-dirty flip—buying low, fixing quick, and selling in a rebounding market?
Those who have already located the market’s sweet spot—buying low and selling within six months as prices continue to climb—are enjoying average profits of $37,375 on each property, according to RealtyTrac.
But engineering such a feat truly takes as much luck as skill. Here are three factors to help you filter house-flipping fantasy from fiction:
Can you buy with cash? Real estate investors are reportedly locked in tight with agents and lenders. Because they buy in bulk and pay with cash, those investors get the best deals. If you can’t write a check for the full amount on the spot, don’t expect your offer to compete with an investor’s.
Will your local market be strong in six months? If you buy the house, fix it up, and then discover you can’t sell it, you’ll have a flop, not a flip. Since market blips rarely become major housing trends, cut through the confusion by focusing on jobs. Strong and growing employment numbers are likely to sustain a steady real estate market.
Are you sure you can make only the improvements that will support a profit? If your project budgets are usually overrun by expensive but beautiful details and add-ons, think long and hard before you tackle a project driven by cold, hard return. If the house you target is a bargain, first identify structural and systemic problems. (One big project like roof replacement might drain your potential profit.) Once the basics are sound, you’ll have to apply a will of steel to choose market-pleasing materials and fixtures that will yield the greatest appeal, even if that means forgoing the crown molding.
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