House flipping sort of hit its hay day before the housing bubble burst. Before the collapse, people were able to buy distressed properties, spend a little cash, and put them on the market way above value. Then during the housing debacle people were able to buy inventory at extremely low values, put a little cash in, and sell the house for a profit. Now that the market is stabilizing and there are fewer and fewer “values” out there to be had, the question looms, “Is flipping still a good idea?”
The easy answer to that question is, “yes!” But, yes there is always a but when it comes to investing time and money. This particular but is to let you know that you need to carefully research every aspect of the house you are thinking about flipping. You need to know the market. You need to know what buyers are looking for and where. It isn’t as simple as getting a great deal and turning it around.
The first step is finding a good value in a neighborhood where the overall values are rising and the inventory is low. Rising values usually means that the neighborhood is situated in a part of the city or county where people want to live. Low inventory means you will have less competition and that often means you will get the best price possible for the property.
The next step is to understand the market. Find out what people in that area are looking for in a new home. Check out other recent sales in the area and find out if they have things in common. Check to see if the recent sales were recently updated. If possible talk with people in the neighborhood and find out who lives in that neighborhood.
If you understand the types of people who reside in an area, you can remodel the house to suit that demographic. If the area is comprised of young families, make sure the house has things that the average young family desires. If the area is mostly retired people make sure the house suits their needs.
When thinking about flipping a house it is important to analyze how long it will take to flip. This is especially true if you are taking out a loan to buy the property. Every month you have to pay the mortgage means less profit from the sale. Even if you pay cash for the house the idea of flipping is to get in, get it fixed, and get it on the market.
So, the answer to the question, “is flipping still a good idea,” is a yes as long as you do your homework. Buy a house at a good price, that is in a neighborhood with rising values and low inventory, and make sure you can get in and get out without wasting too much money on mortgage payments.