When it comes to the fix and flip outlook for 2017, it’s all about finding affordable starter homes for the aspiring first-time home buyers as well as small homes for landlords. While a lot of young people want to buy home, the rental market is still booming creating a demand for move-in ready rental homes. Since lenders are not likely to lower their standards, most young people don’t qualify for loans other than small ones for starter homes. As a home flipper, the year ahead brings promise. It’s always a good time to flip. The question is what kind of home and which improvements make a home flip most profitable. Buying and selling a home in less than a year requires a solid plan, proper loans and support such as reliable subcontractors.
Looking at 2016 for clues and ahead to future
According to an article by fortune.com, home flipping was at a two-year high in 2016. In the first quarter of 2016, 6.6 percent of home sales were flips. People flip single family homes as well as condos. Some of the best cities for a good return on investment include Buffalo, New York and Huntsville, Alabama. Other great cities for fixing up a property to turn into a rental home for other investors include Tampa, Florida, Atlanta, Georgia, Phoenix, Arizona, Boulder Colorado, Arlington, Virginia and Raleigh, North Carolina. In many markets, home flippers enjoyed a gross profit of almost $60,000, which is a 10-year high. Some reasons for the success include the decent inventory of foreclosure and short sale properties. When it comes to flips, expect to spend about six months to complete the rehab process. In 2017 look to cities such as Naples, Florida, Dallas, Teas, San Jose, California and Salt Lake City, Utah where investors find homes at 10 percent below market value.
Making the most profitable improvements
Before buying a particular home to flip, do the research to find out what kind of materials home sellers and landlords use in their rental properties in the same area. For example, if you want to flip a home in a neighborhood in which most the property owners have ceramic or porcelain tile, you don’t want to put down an inexpensive laminate. A local property management company will often advise you on what kind of materials they like to see in potential rental homes such as stainless steel appliances or granite countertops. Upgrading the kitchen is typically the best move. Eye candy such as new pendant lighting fixtures and landscaping is often inexpensive but helps you sell a home. At the same time, pay attention to the factors that come up during a home inspection such as the A/C unit, windows, roof and plumbing. When it comes to design trends, an article by the Los Angeles Times says it’s all about creativity. Futuristic furniture, eco-friendly furnishings and contemporary décor and lighting come into play during the staging process. If you fix up a luxury or high-end condo, consider installing the latest such as pendant fixtures and sconces with rotating discs or furniture with a dichroic finish that alternates colors.
Cracking the investor’s mindset
Because the rental market continues to dominate sales, think about improvements that appeal to landlords and investment property owners. Most landlords want homes with at least three bedrooms, two bathrooms and a washer and dryer. Typically, it’s not worth the money to move a washer and dryer in a basement or garage into the main home. However, if the home doesn’t currently have a washer and dryer, spend the money to add one. Landlords who buy a fix and flip want a rental home that’s move-in ready so they can advertise the rental and start making money. If you plan to sell a home for $175,000 to $250,000, include basic upgrades including laminate or ceramic flooring in the main living areas. Carpet is fine in the bedrooms. In some cases, you find a property with carpet in good condition. Make sure to spend money on pest control before listing your rehabbed property.
At Center Street Lending, we are a private money-lender that offers quick turnaround loans for fix and flip investors in major states including Florida, Georgia, Virginia, Colorado, Washington State, Utah, North Carolina and Arizona. For more information on the fix and flip outlook for 2017, please contact us.
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