What Makes a Good Real Estate Investment?
So what should you look for in a potential house flip?
Location. Expert house flippers can’t stress this enough. Find a home in a desirable neighborhood, or in a city where people want to live. In a down market, like the one that exists today, finding a superior location can be a challenge. Start by researching local cities and neighborhoods. Look for areas with rising real estate sales, employment growth, and other indications that the town will rebound from the recession. Sound Condition. You don’t want to tear the house down, and start rebuilding it from scratch. Look for structurally sound homes. You may not have the opportunity to have a home inspected, especially if you buy the home at a real estate auction. You need to learn what to look for, or bring someone knowledgeable about building, electric, and plumbing with you to look at the home, to determine if the home is structurally sound. Good Schools. Homes in a good school district sell more quickly. The Right Fixes. A home with old carpet and wallpaper featuring pink poodles may be easy, and cheap, to update. Other home repairs to tackle might include installing outdoor motion sensor lights, replacing old kitchen linoleum, and replacing hollow doors with six-panel doors throughout the home. A house that has mold, needs a roof replacement, or needs rewiring, requires some serious time and cash to update and sell. Make sure you know which updates and repairs you can afford to fix, which repairs you can’t afford, and which home improvements will increase the selling price of the house. When you estimate the cost of any job, experts advise that you add 20% to the final estimate. Why? It’s always going to cost more than you think it will, say the experts. Always.
Close to You. You will work on this house daily in the weeks and months to come. Do you really want to work all day, and then drive an hour to get home? Don’t invest in a house too far away from where you live; you will spend more money on gas, and it will take longer to fix up the house.
Analyze the Kitchen. The kitchen is the most important room in the house. Pay close attention to this area when you buy a house. Most experts recommend you focus on remodeling the kitchen, and then look into bathroom redesign ideas. Analyze how much you will have to spend on the kitchen in order to make it appealing for future buyers.
Value. Make sure the price of the home is below its value in the local market. Otherwise, you will not make money. Try to buy the worst house in a great neighborhood, versus the best house in a lousy neighborhood. The worst house in a great neighborhood has nowhere to go but up in value, due to the value of the other homes in the area.
Although you can search the web and see millions of foreclosed homes for sale, never buy a home without seeing it in person. This is the biggest mistake new flippers make. Keep in mind, the online photo gallery only tells part of the story: Old photos, an awful neighborhood, and black mold are just a few of the horror stories of foreclosed homes online. Always investigate a property yourself before deciding to buy.