Flipping Properties is a SCARY endeavor to embark upon! Jaime Fallon showcases flipping and listing in the video below to maximize your profits as a seller or flipping investor. Here are other factors to consider when embarking on a house flip
EVALUATE NEIGHBORHOOD Do values appreciate over time? ◦Is there a HOA? Limits what you can do without approval
EVALUATE SCHOOL DISTRICT Is the neighborhood part of an “A” rated school district?
EVALUATE NEIGHBORHOOD COMPS Analyze Days on Market and the homes specifics. Is it a luxury or executive neighborhood that makes it unique? Is the home in a unique job are such as an oil and gas or tech neighborhood?
WHEN EVALUATING A HOUSE TO RENOVATE Does the property have equity? What is the payoff on property? Does the seller have cash to update property? How long will renovations take?
What Is After Repair Value (ARV) in Real Estate? The 70% rule is a basic quick calculation to determine what the maximum price you should offer on a property should be. This calculation is made by multiplying the after repaired value (“ARV”) by 70% and then subtracting any repairs needed. This gives you a 30% margin to cover your profit, holding costs & closing costs. Calculating After Repair Value (ARV): The ARV formula isn’t complex. It basically boils down to the Property’s Current Value + Value of Renovations = ARV.
Example: Maximum Purchase Target = ARV x 70% minus Estimated Repair Costs. Maximum Purchase Target = $200,000 x 70% – $30,000 repair costs. Maximum Purchase Target = $110,000
*Get the materials estimates right and buy at discounts. Work not only with the big box home stores but also with liquidators and rehab stores.
*Know your contractors and their capabilities. Supervise to the extent necessary to be sure you’re getting quality work that will be done on time and inside the budget.
*Budget based on your buyer. Keep the materials in the “acceptable” range if you’re going to be selling in the commercial market. Upgrade to finishers that buyers want if you’re selling in the consumer retail market.