House flipping has become more popular with the proliferation of home improvement shows. With that comes more competition – from investors, i-buyers, and institutional investors. With rising housing prices, labor costs, interest rates, and construction costs, it is paramount for the small investor to make the right decision. In the article “What to Look for in a House Flip” for House Digest, Emily Kammerlohr covers the standard considerations but also has interesting takes a newbie might not be aware of.
Some of the standard considerations are:
- Buying in an area that is experiencing growth with new business development and amenities like schools and parks nearby;
- Have a budget and select home in the bottom range of your budget ;
- If you are new to house flipping, consider only homes that need minor repairs such as painting, replacing floors, lighting and cabinet fixtures, minor landscaping, and new appliances. Consider carefully your own strengths and skills and hire out what you can not do:
- Avoid homes with major structural issues. If you don’t know what those may be, have an inspector accompany you when making that decision.
Here are a few nuggets:
1. Avoid Busy Streets
If you are basing your offer from nearby comps, Aniya Equity, LLC, states that homes in high traffic areas are consistently valued at about 10% to 20% less than comparable homes on more quiet streets.
2. Check to see if the area is safe because prospective buyers will
In addition to walking and driving the area to see if it is walkable, Rocket HQ, suggests to run the address through the National Sex Offender Public Registry AND to check the neighborhood out on a local crime reporting website like LexisNexis. RocketHQ lists several ways to check a neighborhood’s safety.
3. Avoid Custom Builds
There’s a reason for the cookie cutter home. Builders know what sells. Most homes fit a certain criteria that will appeal to the most buyers. A home that has be customized (think artist studio with high ceilings and lots of light) may be nice but it will only appeal to a smaller audience.
4. Purchase Homes Built After 1978
Homes built after 1978 will not contain lead paint. If you are planning to flip your house, EPA requires a clean-up with a certified contractor. So save you self a ton of time and money.
Read the whole article here.