Flipping For Fast Profits: How Do You Do It?

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This home is a perfect example of what can be done in flipping. Located in East Cobb in the Lassiter School District, this home was purchased for $94,000 and sold for $195,000 after $35,000 in rehab was completed. The home already had some great things going for it, but we opened up a wall that gave us a huge great room instead of two tiny living areas, painted old dark wooden beams, did a complete redo of the kitchen and bathrooms, and poured a new sidewalk where an old cracked up one used to be. Most of the rest of our items were cosmetic in nature.

When it comes to selling properties quickly for very high return on investment and quick profits there are some things you can’t miss if you are going to have success. A lot of beginning investors have dreams of making $20,000, $30,000, or $40,000 in a 90-120 day period off of an investment of $50,000 – $150,000. Flipping for fast profits in real estate investing is possible, but how do you do it?

Choosing the Right Market

First you must look at macroeconomics of an area, where are the jobs coming from, who are the major employers, what demographic is driving the population in the area, is it retiring baby boomers, workers there for oil fracking, families with an average of 4 children? Are jobs coming to the area or leaving? What are the main industries, and does the area have a diverse economy or rely heavily upon one sector or industry. What is the supply of 20-40 year old workers with a college degree in the work force (this is highly sought after for new employers looking to move to the area). What are the unionization percentages, and is it a right to work state? How do income taxes and property taxes as well as cost of living affect likely population and job growth? How active has the Chamber of Commerce been in luring new companies to the area? What has the population growth been like? Are there new housing starts, how many months of supply of inventory are there in the market, are there new schools, roads and shopping centers being built. How much new housing is competing with what you would want to sell? What are the five and ten year growth projections? What has appreciation been and what is it likely to be moving forward.’

In a great flip market, you want to be in an area that doesn’t have much supply of housing, is growing in population, and has a very strong employment base that is likely to grow, and has a diverse base of employers. If schools are growing and roads, sewer and water lines are expanding then we know that the infrastructure is likely to have more growth.

Choosing the Right Neighborhood

Once you have identified the area that will perform well for a quick sale, it’s important to decide which neighborhood is most likely to provide high profits in a short period of time. This means we have to dig into the MLS (multiple listing service) and decide which homes are priced well below the other homes on the market. Ideally these should be in high demand areas that are close to shopping, the interstate and area jobs. Being by a park and other desirable attractions is a very nice plus. Being in top schools with the best test scores is also very important, especially in slower markets. It’s always smart to buy the home that is on the smaller side of the neighborhood, as the larger homes will help your home have higher value, but smaller homes would bring your value down.

The homes in the neighborhood will need to have excellent landscaping and pride of ownership, you will want good covenants, and should avoid buying next to homes that have large barking dogs or other things that might cause potential buyers concerns. Also avoid homes in neighborhoods that have very high or overly restrictive HOA’s (unless all of

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the neighborhoods in that price range have similar covenants).

Pay close attention to the comparable sales, these need to be fairly neighborhood specific, and only go no more than 2.5 miles from the subdivision at the max! Comps that are three months old or newer are the best comps to use. Make sure there are not many foreclosures in the neighborhood, and stable neighborhoods that have very few signs for sale is a sure sign of desirability.

The House Itself

While the flip is mostly about the acquisition price and the after repair value, there are some things that can really make a difference. What added value items does the home have that others you will compete against do not? Hardwood floors beneath carpet are a great find, being four sided brick when other homes are not, or having a lifetime metal roof like the one pictured above are nice bonuses. Built in book shelves, an open floor plan, large decks or patios and fenced yards that come with the home are outstanding. The home will need to have impeccable painting, all new lighting that looks high end can really spruce things up. Spend your money on the kitchen and bathrooms, that will provide the best bang for your buck! Granite counter tops in both kitchens and bathrooms add value more than almost any other improvement, although quartz and concrete are also becoming popular in some areas.

Opening up walls that are not load bearing in common areas can go a long way towards making an older home feel more modern and inviting. This is especially true if opening the kitchen towards the family room, preferably including an island! Replacing old brown wooden doors with newer updated doors will provide outstanding return. Tile the bathrooms, and replace old toilets, frame mirrors with nice wood trim. If there are no plans to replace kitchen or bathroom cabinets, at least re-stain or paint them and do new hardware. New exterior doors and replacing rotting wooden garage doors with aluminum doors that have carriage door hardware are also excellent ideas. Landscaping can be a very affordable way to really make the place look great!

Marketing

When you are flipping, it’s all about creating urgency and having the nicest possible property. Price the home with $5,000 or so equity, or 5-10% below your competition (provided this allows for sound profits still). Use high end brochures that people will want to take with them. Schedule an open house with refreshments and invite all of the agents that sell in that price range. Market the living daylights out of the home with a few thousand direct mail post cards to move up neighborhoods, and the surrounding neighborhood. Use the 50 or so websites that will allow you to maximize web presence and put the home in the Real Estate Book and other magazines. Additionally, send an email through your brokerage, and use a Constant Contact type database to email other agents.

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