Do you want to flip homes? Let me just start by saying, you’d better know your numbers.
Right now, we have a wholesaling phenomenon going on. A wholesaler will find a very cheap home, then blast it out to as many people as possible to get it sold. For one example, I found a wholesaler touting a $270,000 home that he claimed was worth $375,000 once it was fully updated. Sounds amazing, right? Well, on closer inspection, he had compared this split level entry to other ramblers, larger homes, and newer homes. Once this home was compared to other split level homes nearby that had actually sold, it turned out that the price averaged around $330,000. If this home took $60,000 to update and sold for $375,000, that would be a great profit! But if it takes $60,000 to update and sells for $330,000, you’d be just breaking even.
So, to make flipping homes work, you need to know your numbers! Before you buy a house, find actual comparables to know what the house will sell for, price out all necessary repairs, and give yourself a good margin to make sure the work is worth it. You need to compares apples to apples!
Lately, several homes have hit the market that have been half-renovated, as the owner realized that it wasn’t worth it to them to finish the renovation because the house wasn’t worth enough. Don’t let this happen to you!
If you ever come across a house you’d like to flip, but you’re unsure of its post-updated value, reach out to me and I can help you figure out the margins!