Maximize your real estate profit with these due diligence tips
It’s no secret that real estate is a lucrative career or side gig. 2019 proved to be no different.
According to Attom Data, nearly 50,000 homes were flipped in just the first quarter of 2019. The total dollar volume of homes flipped reached a 12-year high of $6.4 billion. However, despite this growth, the average gross profit was only $60,000 – a 12% decrease from the previous year.
Source: Attom Data June 2019
This proves that while house flipping is lucrative, it isn’t as simple as buying a home, fixing it up, and listing it at a higher price. The most successful flips that deliver the highest profit take capital, time and extensive due diligence.
To choose your next flip property, here are three questions that you should consider asking:
1. What is the estimated cost of the flip? And the projected profit margin?
Crunch the numbers. The first rule in flipping a house is to understand the numbers down to every penny. Are the renovations needed mostly cosmetic? Or does the property need structural renovations? Ask a property inspector to help identify which improvements to make and which ones can be avoided.
Most importantly, what will be your profit margin? Identify issues, ask for quotes on the necessary improvements, and consider the time that will be involved. After all, time is money, so holding costs matter.
2. How is the local market doing?
Farm the area in which you want to flip. Do your research on the local market: crime rate, school rankings, median income, population growth, resident demographics, business growth, etc.
Know what you’re getting into before you buy. The most common flip delays are due to permitting times and requirements. Researching the local real estate market, zoning laws and ordinances related to construction in advance can help mitigate delays and unanticipated costs.
3. What is your ideal buyer’s characteristics and motivations?
Crown molding, french doors and granite countertops aren’t for everyone! By doing a needs assessment of the market, you’ll focus your time, money and energy on the right upgrades. Create an archetype for your ideal buyer in the market: what life stage are they in? What is their income range? What amenities would they require?
Know who your end-user is and you’ll find yourself focusing on the right type of upgrades and improvements that the market is willing to pay for. To flip the house fast, you’ll need to price your house correctly so it doesn’t sit on the market for too long.
If you are interested in selling your properties in as in condition, or have a renovation/remodel in mind get reach out to Our Flipping Business. With our team’s experience, we can ensure the best outcome. Get in touch: https://www.ourflippingbusiness.com/contact-us/