If you plan on flipping a home for profit, there are five variables that you should consider:
1. The seller’s motivations. If the seller is under duress or the property is owned by the bank, you will stand a better chance of buying low and maximizing your profit.
2. Location, location, location. It’s not the oldest adage in the real estate industry for nothing. Make sure that the property you’re buying is in a location, area, or community where home values are trending upward. Do your market research and verify that before you do your property flip.
3. The design of the property as it relates to supply and demand. For example, in South Central Pennsylvania, a lot of people are looking to downsize into one-level homes over the next decade due to the demographics of our population. Demand is very high for ranch homes or other single-level properties, but supply is low and there aren’t many new construction properties that meet this description. So, find a good area with a ranch home that you can flip for maximum profit.
4. Your offer structure. Remember, cash is king in the world of real estate. If you make a clean offer, you may be able to make the seller come down lower on the sale price. When at all possible, pay for your property with cash, don’t include any contingencies, and offer a quick settlement.
5. Risk versus reward. Sometimes it makes more sense to make a little bit of money in a short amount of time than it is to go for a highly speculative windfall that may take more time. Those types of properties only work if a number of variables fall into place. Even mature, experienced real estate investors typically avoid those big risks and hedge their bets on more certain real estate investments.
If you have any other questions about purchasing a property to flip or would like to see a list of foreclosure properties, just give me a call or send me an email. I would be happy to help you!