Are you considering investing in real estate, but unsure of how to get started?
Flipping houses for a living is such a rewarding line of work, and here at CastleRock REO, we take tremendous pride in helping first-time flippers like yourself learn the ropes and find success investing in residential real estate.
So, if you’re feeling overwhelmed by the sheer number of homes for sale, we have some fundamental tips to help you navigate the market and identify which properties hold the most potential for a profitable flip.
4 Signs To Look For In The Search For Your First Flip
1. The Asking Price Allows For Renovations
The best way to start your search is by looking for properties listed well below the average asking price in your neighborhood of choice.
Remember, property value is largely determined by comparable listings within a region; in other words, once renovations have been completed, your flip will be worth about the same as other similar move-in ready homes in the area (based on factors like the number of bedrooms and bathrooms, size of the lot, and total square footage of actual living space).
There are many points to consider as you’re calculating your total reno budget, but if you want to quickly estimate how much you can realistically invest in a property in order to earn a profit, then subtract the listing price of the home from the price you expect to sell it for (AKA the average asking price of comparable homes in the neighborhood).
2. There’s Plenty Of Room To Work With (Literally)
Flipping houses is all about making the most of your budget, and that means avoiding expensive, unwarranted projects.
So, rather than investing in a house that you know is just too small for today’s buyers, focus instead on finding a home that already has ample living space. By avoiding stressful add-on projects, you’ll save significantly more time and money on your flip— not to mention the added benefit of minimizing red tape and other delays that inevitably arise when dealing with local municipalities.
Keep in mind, there are a number of ways to add value to any home; even you’ve already invested in a property whose square footage is less than ideal, that doesn’t mean all hope is lost. You’ll just need to figure out how to attract eligible buyers who are willing (and able) to offer you the full asking price.
3. “Good Bones”
While there may be no such thing as an effortless flip, that doesn’t mean all investment properties are created equal— they’re not.
And although every flip presents a unique set of challenges, there is one red flag that’s all but guaranteed to cut into your profits: a damaged foundation.
As you can imagine, having to repair a home’s foundation can quickly deplete your entire renovation budget. Not only that, but this type of project is also sure to delay other projects and quickly turn your investment property into little more than an unwanted money pit.
So, regardless of how many other buyers or investors are interested in a given property, always make your offers contingent on the results of a professional home inspection; it pays off drastically in the long run!
4. Sufficient Buyer Interest And Activity
Finally, it’s important to keep your end goal in mind at all times— the property needs to sell! And the first step in attracting buyers is investing in the neighborhoods they’re drawn to.
Obviously, the most recent market data— including current trends— will help you create a clear picture of buyer activity for any given neighborhood. But with that said, it’s also important to research historical property values and shifts in demand. Focus on the past 12 months at least, especially since real estate activity tends to ebb and flow seasonally in most regions.
As you’re comparing active listings, consult with your Realtor and ask about any insights s/he has on the local market’s conditions. Find out how s/he expects to see demand adjust during the upcoming weeks and months as well.
Find Your Ideal Investment Property Today
Start searching for your first (or next) profitable flip with CastleRock!
Our nationwide inventory of affordably-priced homes for sale is available online for easy, fast, and convenient browsing. With plenty of new listings added every month, we strongly encourage you to take a look and bookmark our site for easy access.
Lastly, please feel free to contact our friendly staff today if you’re interested in learning about additional discounts you may be eligible for as a cash buyer.