Many people who venture into house flipping do not succeed their first try, but why? Finding a good property to flip is one of the most important parts, and those with inexperience may just not know what to look for. There are several things you need to look for when purchasing a house to flip. You will want to avoid major problems like foundation issues, mold, and electrical overhauls. If there are large scale renovations required, it’s probably best to keep looking. Here are the best ways to find a good property to flip on the internet, at auction, as an unlisted property, or foreclosures.
Listings on the Internet and MLS Search
You may find the perfect listing on realtor.com, ReMax, or any MLS database search engine that has quite a bit of information to go from. Inspect all given details about the property and take a good look at all the pictures available. There may be inspection reports or other property disclosures available before you even have to visit in-person. Rule out all major projects unless you have the budget for it or it’s something you are confident in taking on. Shoot for properties that require cosmetic work only and you’re well on your way to finding a good flip.
Properties at Auction
If you are more experienced at flipping or have enough cash on hand, an auction property is a great way to find an acceptable home at the right price. In these cases, inspecting the property in-person is a must. Keep in mind you may not be able to enter the home so there are some risks involved with auction properties. However, if you can peek through the windows, inspect the exterior of the house, and get a good idea of the possible renovations needed, you’ll be in good shape if you don’t blow the budget at the auction itself.
Unlisted Properties
You may be able to find a property from word-of-mouth that has not yet been listed for the perusal of the general public. If you hear of a house that stands to make a good profit after renovations then seize the day! Inspect the property to get an idea of the cost of renovations and make an offer right away if you are interested because they will likely be listing it on the market soon.
Foreclosures
Buying a property from the bank is great for this one simple word: discounted. Properties in foreclosure are often listed for less than they are worth and certainly way less than their potential value. In other words, it’s possible to buy a foreclosed property at $25,000, renovate for $40,000, and still sell for over $100,000 in the right neighborhood. Although the buying process usually takes longer with a bank, you can see why quadrupling your investment is appealing.
Your Checklist
Here are a few things to look for in a property you want to flip:
- No costly repairs
- An up-and-coming or well established neighborhood
- Neighborhood comps within your desired selling price
- A property that has potential
Here are some repairs to avoid:
- Foundational cracking
- Entire roof replacement
- Termite damage
- Mold or asbestos
- Whole house electrical rewiring
- HVAC equipment missing
- Fire damage
- Major plumbing or water repairs
- Flood damage
- Condemned properties
By avoiding major and costly repairs, you are more likely to stay on budget and make a profit. Buying a flip home in a good area also increases your chances of selling at the price you want. Keep repair costs down and look for the perfect project in the perfect place. The three rules of real estate are: Location, Location, Location.
Finding that diamond in the rough just got easier. Getting a short-term loan for the purchase and renovations for your flip is an option at Center Street Lending. With an average loan of 9 months, we help you purchase the flip house that traditional lenders don’t want to touch. Make sure to check out our blog for more information about flipping houses and the lending process. We are available to help you get started with your fix and flip adventure so contact us today!