By Bess Hochman
A house flipper’s objective is to buy a house at a significant discount, add value to the home through improvements and then sell the property as quickly as possible. Most flips are purchased and sold again within 12 months.
The presence of house flipping provides some advantages to communities. First, flippers provide liquidity to sellers who cannot afford housing costs by helping owners to unload their property quickly. Also, they invest in housing stock, which boosts real property values.
Flippers also facilitate gentrification by making improvements to houses in up-and-coming neighborhoods increasing desirability and demand in the area. These improvements raise property values and ultimately add to the community tax base.
A good flipper can operate any place there are willing buyers and sellers and can make money whether in or not in a hot market. The most successful house flippers are able to buy homes at a discount to their market value.
In the current market, where inventory is low and cash investors are beginning to fade, traditional homeowners are the most common buyers. They are improving their homes and staying in them for extended periods of time. This market leaves deals much harder to come by.
However, the deals that are found can be even more profitable than ever. The average gross profit for property in the L.A. area is over $137,000 according to RealtyTrac.
The best returns on homes flipped were with a flipped sale price between $1 and $2 million.
The current market has seen a decrease in the number of homes being flipped as flippers focus on higher end homes where the profits are greater. When done correctly flipping homes can still be profitable.
The number one mistake house flippers make is over-improving a flip and spending too much on improvements that fail to show a significant return.
The kitchen is the most important room in the house when it comes to a flip. Done right, kitchen updates can give a luxury look on a modest budget for improved profits.
Bathrooms are also a great way to increase profits. Most people look for clean, bright and modern bathrooms. Updating fixtures in the bathroom can really help the value of the flipped home.
Other improvements you may need or want to make (depending on the condition of the flip) are: copper plumbing, replacing windows, upgrading the electrical panel, upgrading to central air conditioning and heat, as well as painting and landscaping the exterior. If the condition of the roof looks bad from the street, you should also think about replacing it. It’s about curb appeal!
When getting into house flipping the most important things to remember are to buy at a discount, stick to your budget with improvements, move quickly through the process and refrain from being greedy when selling the property. Keep your project under control so you get out with a nice profit!
For a free courtesy consultation, or information regarding mortgage brokers, contact Bess Hochman, a top Westside Real Estate Broker for over 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article.
Contact Bess by phone at 310.291.4111 or email Bess.CenturyCityNews@yahoo.com.
“Bess is a master negotiator!” says Michael Donaldson, attorney and author of “Negotiating For Dummies.”
