Are you considering flipping a house in Western MA? House flipping can be a great way to make a profit, but it can also be a quick way to lose a bundle, if you are inexperienced and don’t have the right help along the way.
You will want to know what the top three red flags are for house flipping in Western Massachusetts and how to successfully navigate around them to make money.
ABC News recently reported that in 2013 there were 156,862 homes flipped in the United States. That figure is up 114 percent over 2011.
That is a huge jump, but is it the right time for you to invest in a flip or did you miss the market? There is still an opportunity to make money on flipping homes, if you take the right steps and work with the right REALTOR.
As a realtor in Western MA, I have extensive experience assisting investors with their flipping purchases and renovations. I have several clients who buy and sell flipped homes with me multiple times throughout any given year. Additionally, I grew up in a family that flipped Western MA houses and I learned from their experiences. I am not an investor in flipping homes, but I use my experience and hands on knowledge to assist my investor clients and help them realize profits on their projects. If you involve me in this process from the beginning I will do all I can to ensure you have a positive experience and turn a profit from your flip. The following items are the things to understand, but if you understand the process you, too, could profit from flipping homes.
Red Flag Number One – Initial purchase. You need to be aware of several things when you are buying a house to flip. These homes are always in some sort of distress, whether they are foreclosure or short sale or just merely rundown. The reason they are less expensive and less desirable to traditional buyers is because there are usually mechanical and structural flaws. These properties are sold as-is and sometimes you don’t even get to inspect them. Be certain that you have done your research and understand the flaws and the expense in repairing them.
You don’t need to fly blind in this process. Bringing along an experienced Western MA real estate agent to guide you with advice and negotiation power will help to protect you and ensure that you feel comfortable with your decisions. Especially if this is your first time attempting to flip a property, you need to find someone you can trust and lean on their experience in making decisions.
Red Flag Number Two – Renovations. It is very easy to get lost in the project. There are always unexpected repairs that come up and inevitably something costs more than you budgeted for. You need to be sure that you are prepared to weather a bit of surprise in working on the property. Additionally, you need to take great care not to over improve the property. Many investors make the mistake of finishing off a mid-range home as if it were a mansion and spend what would have been their profit at closing.
I advise my flipping clients throughout the renovation process. I visit the house as it is being worked on and let my client know if I think they are over improving or making poor decor choices. As an agent working with buyers and visiting homes daily, I know what today’s buyer is looking for in style and color choices and I share that information with my investor clients. There are also upgrades that I tell my investor clients are not worth doing as they won’t bring enough of a return. My advice ensures that when the home is ready to go on the market it will have visual appeal and room to price it attractively.
Red Flag Number Three: Selling. It is very tempting to want to ask top dollar or even higher for your freshly renovated project. After all, it is gleaming and you put your heart and soul into it and shouldn’t someone pay more for that? Be very careful in pricing. There is an old saying “Greedy pigs get slaughtered”. You should be very careful in making sure that you aren’t reaching too far because overpriced homes, no matter how pretty they are, will sit and grow stale on the market. Remember, you have monthly carrying costs to consider. Your goal is to get the house sold in 30-45 days for a reasonable price that will bring you profit.
Pricing is huge in flipping a home. The time to know what the fair market value is for your flipped property is before you purchase it. I run comparable sales figures for my investor clients before we even write an offer. In doing this, my client can figure out what his top purchase price would be by estimating repair costs, holding costs, expenses and fees. My clients all have a pretty fair idea of what type of profit range they will see on any given home they purchase because we do all the research in the front.
Flipping homes in Western MA is not for everyone, no matter how well prepared you are, there is still a certain amount of risk involved. If you think you are ready to attempt a flipping project in Western MA, get in touch with me to discuss the process and allow my experience to guide you.
Lesley Lambert, Western MA REALTOR with Park Square Realty 413-575-3611
