A Fix & Flip business could very well be your way out of the 9-5 day job. Not only does it hold the possibility of earning more, it also gives you a good opportunity to manage your own time, travel and meet new people. Plus, the extra money doesn’t hurt.
Those that have become rich as a result of fixer-uppers testify to the fact that while it can be a little risky, especially at first, it could be well worth the sacrifice and the risk. It is a very attractive, well-earning business with a very good rate of return.
Depending on how your business is financed, buying and selling properties may involve either very little or a lot of money. One good way to leverage your interest is to employ the use of other people‟s money.
Any successful fixer upper will tell you that the secret to success is the knack to find good properties that are seemingly un-sellable, but when fixed up can actually fetch more than its weight in gold. While some have an almost preternatural ability to nose up to such properties, there are ways that everyone can learn to sniff out good property buys.
Here’s what you should look for when picking neighborhoods to flip properties:
1. Doghouses – the term “doghouses” come from homes that aren’t structurally damaged, only unkempt and needing cosmetic upkeep. Some homeowners have good sound homes but neglect to do simple things such as clean the confines, plaster the wall with paper, and keep the roof in good repair and such.
These houses may be in such a condition because the owners are both lazy, in dire financial straits and unable to maintain their homes, or planning on moving anyway. In such a case you will want to inspect the home closer, you could be in for a pleasant surprise.
If you spot such a house, you will do well to investigate more since you have, in front of you, a good chance of snagging a diamond in the rough.
Owners of such houses find it hard to sell these houses even if there is only minimal damage. This is because they are unattractive and people tend to have the inability to look beyond minor faults to find a good sturdy house standing in front of them.
2. Look at the Neighborhood – Do a little research on the neighborhood to find out if the area is a booming area worthy of prime property prices. Some properties, no matter how wonderful they may look like, can’t fetch good prices because they are in bad neighborhoods, or are in areas that are underdeveloped.
Ask around the neighborhood for signs of improvement in the last few years. Check out the amenities of the area, the community support, and the general impression of other people in the neighborhood.
Good house hunters are able to catch a good neighborhood on the rise, just along the time when property space is cheap and right before the area experiences a boom in property prices. Other things to ask about are crime rates, accessibility, proximity to hospitals, schools, and other community fixtures. Catching motivated sellers at just the right time is a direct result of good marketing!
3. Go to Local Government Meetings – It would be nice to know the government’s plans for the area. If the government plans to develop the area, create higher class amenities and housing then there could be a sudden surge in the prices in the area. This is then a good time to catch the wave before prices skyrocket.
You could also research plans for companies and consortiums to develop malls, transportation, and other facilities. These could radically affect the prices in the area. If you are able to anticipate this ahead of time then you are in line to make good money from this business.
4. Crime – Crime, and the community is a major factor in the choice of a home. Make sure that the properties you put your sights on have low crime rates and have a strong sense of community. This means that the people in these areas should get along with each other. This is a very important aspect of the choice of home for most people.
5. Demographics – Using websites like Trulia.com and Zillow.com, you can find out the demographics of the neighborhood, including schools, average age, and income of residents, number of renters vs. owners, etc. Also, these websites can tell you the average supply of homes. Six months of supply is considered a neutral market, while less than six months is a seller’s market, and more than six months is a buyer’s market. Take these factors into consideration when planning on doing a Fix and Flip deal.
In short, DO YOUR HOMEWORK before you pick a neighborhood to invest in. Don’t find out that there’s something wrong with the area AFTER you buy the house!
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Attorney William ("Bill") Bronchick, the host of Legalwiz.com, has authored six best-selling books and is sought nationwide for his 30+ years of real estate and legal knowledge. He has been interviewed by numerous media outlets, such as CNBC, TIME Magazine, USA Today, Investor Business Daily, Forbes, and the LA Times, to name a few. William Bronchick is the co-founder and past President of the Colorado Association of Real Estate Investors and the President of the Colorado Landlords Association. Click on the "About" link above for more information on William Bronchick.