The Time Is Still Right For Real Estate Investing

Over the course of the last 18 months, homes have been trading at what seems like lightning speed. In fact, the majority of homes have been selling in less than 30 days. While that is usually a cause for celebration (flip faster and make more money!), a robust housing market has increased competition which has limited supply and driven purchase prices up. This is clearly not great for your investment.

With more buyers, especially in rapidly growing metros, homes are “flying off the shelf,” so to speak. This is especially apparent in major regions like Southern California, the Mid-Atlantic, the Northwest, and Texas ­which are all experiencing an influx of residents. This high demand is inflating prices, even for homes that need a little T.L.C.– which is the fix-and-flipper’s sweet spot.

The current market has made it tough to find those perfect projects, especially because investors know you make your money when buying. So, what’s the upside? It may be tougher to find the right projects for the right price, but consider the following:


You Can Sell Your Flip Faster

Tougher competition and inflated home prices mean homes are getting purchased faster. You can win if you can get the right project done quickly, back on the market and off your books faster. At the rate of home buying today, you may be able to get one extra deal done this year, which is more cash in your pocket.

Not to worry, we have a few more tips for you to consider that will help you sell your flip faster and give you a roadmap to a shorter flip timeline. One piece that many investors overlook is the lending component.

Lenders are notorious for adding time and complexity to a flip. Finding the right lending partner, one that is an expert in your field of fixing-and-flipping and that can close your loan in less than 10 days, allows you to move faster and really take advantage of the current housing demand.


People Are Spending More on Housing Than Ever Before

Knowing that home prices are rising may make you feel less confident about selling for a price that still provides a healthy return on investment. This is a natural concern, but the good news is that buyers today are investing more of their income on housing than ever before. In fact, Millennials and Gen X’ers are spending upwards of 40 percent of their income on housing versus the 20 to 30 percent that Baby Boomers spent. Why is that? Not only is that what it takes nowadays but there are design trends that are attractive enough to nudge buyers upward on their budgets.


How to Turn a Profit in any Market

Remember, you make your money when buying. If you buy at the right price it will be easier to make a profit. A few tips to ensure you buy at the right price:

  1. Don’t buy a property that needs drastic fixes.
  2. Don’t try to do every improvement you see on TV – walls don’t always need to be taken down and kitchen cabinets can be updated instead of torn out.
  3. Be diligent when doing the initial inspection and don’t be afraid to ask for help from a partner or fellow investor. Check out our checklist.
  4. Get your contractors lined up before starting work. Write out expectations and get a signed contract including the time it will take.
  5. Do your research. Make sure that after the repair and additional costs you will be able to sell the house for the desired profit in the current market.
  6. Don’t over improve for the neighborhood. If all the improvements in your property are high end and the neighborhood has average finishes, your home may not appraise for what you want because of the market value price of the neighborhood.
  7. Use the 70 percent rule to make sure you are not overpaying for a house.

The best flips are the modest ones that take little time to complete. The longer you hold a flip, the more it costs and the higher the risk of not making a profit is.

Don’t try to do this without the partnership of a trusted private lender. Ask us today about how we make it easy to get a loan quickly and focus on making the most profit. We are a leader in fix-and-flip loans and will partner with you to get you to get the best outcome for each project and investment.