A Good Real Estate Investment

It’s a Saturday afternoon and you are out driving around looking for flips! You have a budget and a list of things that you can and will do to make a house perfect to put it up for sale. But, can you see through the dilapidation and poor condition of a possible investment? Here are some ideas to look for in a potential house flip.

Location Find a home in a desirable neighborhood, or in a city where people want to live. And.It's in a neighborhood where homes sell fast. One of the first clues that a house is flip-worthy is that it's in an area where homes sell quickly. Is this an already established area with rising prices? Is it a transitional neighborhood with good potential that may not be quite "there" yet? Is this an area with good schools that will attract families? Is this a community popular with retirees? Knowing your market will help you to choose the most desirable home and it should help you know what your profit margin will be.

Every neighborhood has a not-to-exceed price. Know what that is. People don't just live in a house, they live in the surrounding area, too. A potential flip should be in a good neighborhood with access to transportation and amenities like parks. Perhaps the biggest indicator of a flip-worthy home is the quality of the schools. Even if you don't have kids, most buyers see good schools as a huge plus. In a down market, finding a great 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 remain on stable ground. Fast-moving markets generally mean these overheads won't last long. On a national level, homes remain on the market for 62 days on average. So be sure to check how long it will take in your own neighborhood.

The house meets the 70% rule For a flip to be worth your time, effort, and money, you should make between 10% to 30% return on your investment. To determine your potential return, see if the flip meets the 70% rule. Can the house be bought for 70% of what it will be worth once fixed up, minus any needed repairs, closing costs, and real estate agent fees? If you can buy a house for $110,000 and fix it up for $30,000, you'll want to sell it for around $200,000 in order for it to be worth your while. To find what a home will be worth fixed up, check the prices of similar houses in the neighborhood. 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. See it First 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 Price the house right To get a ballpark figure for how much you can sell a house for once it's fixed up, is to check the median home price for that market. This price is a presumption of your home and is typical in terms of size and number of rooms. Good Condition 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. Don't buy a one-bedroom house to flip, because most home buyers are looking for two bedrooms and more. Anything smaller will minimize the demand at resale. Another flip-worthy must is a functional floor plan.

The Right Fixes The physical condition of the home should be fair and correctable without draining your bank account. A kitchen or bathroom renovation or installing new flooring should give you pause including foundation and structural issues. Tackling these problems can destroy a renovation budget with overages and stretch the time frame of the flip. 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.

Analyze the Kitchen The kitchen, being the most important room in the house, must be paid close attention to when you buy a house. Experts recommend you focus on remodeling the kitchen, and then, secondly, 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.

Know your buyer and renovate for them If you have invested in house in a neighborhood with good schools, then your buyer is more than likely going to be a young family. Older homes may not have the open kitchen/family room that these buyers look for. Spend your money making the family space open and flowing. Make sure there are enough bathrooms for kids and invest in a master bath. Finish the basement if possible. If this is a retirement area, look for a home with just one main level or a ranch style. If there are stairways, open them up and widen tight spaces. Make sure the home is easily accessible from the street. Stay away from homes with big stairways up to the front door. And turn the yard into a patio for a maintenance-free outdoors.

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Most importantly, when looking for a home to flip, it shouldn't have any strange, odd or crazy characteristics like a railroad line running through the backyard or a very busy road out front, or a swamp with its odors and mosquitoes and other problems that can't be changed.

So, when you are out on a Saturday afternoon looking for "Flips", look in an up and coming neighborhood, with good schools on a quiet tree lined street and the house is attractive enough with possibilities galore that fit exactly within your budget!

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