Flipping Houses Lesson No. 1 - Understand the potential buyers for your area.
There is a lot of talk these days about flipping houses for profit with a dozen or so shows both on free to air and paid TV dedicated to the topic. They make it look so easy and very profitable. Buy a house, spend a month or two doing it up and then sell it for a nice profit. But is it that easy? Well in a word no. There are many pitfalls and dangers in flipping houses, but when done right you can make good money out of it. So what are some of the things that can go wrong when flipping house.
Number one on my list is finding the right property and that is what we will discuss in this newsletter.
Buying the right property could take you a long time, and you must get this right before you start picking out your paint colours. So what do you look for. The old saying "worst house in the best street"rings true here. But often buying the worst house in the best street may not be affordable. And depending on the street, may not be the right decision to make a profit.
The first thing you have to do when looking for a property to flip is to take out the emotion. This purchase is not about you, it is about your potential market. You need to understand the types of buyers looking in the area. Your potential buyers link directly to the type of house and the changes you will make in your flip. There is no point buying a small two bedroom house in a market that is prominently selling to families. This is a two step process. First you need to decide on the area you want to target your search, then research the profile of the area. Websites such as Real Estate.com can provide you with some basic information on suburbs, sales histories and demographics of the area. Nothing beats a field trip when it comes to research. You need to get out into the area you are thinking of flipping in. Go to the local cafe, talk to the staff etc. Engage with local real estate agents about previous sales in the area and the types of houses that sell well. Go to open houses of completed homes and have a look at the features and finishes. Get to know the area you are thinking of buying in. Just remember this is not your house you are buying it is your potential buyers.
Take all your research and write yourself a buyers profile. This is the definition on the type of buyers who will be interested in buying your completed flip.
Lesson no 1 - understand the potential buying market in the area you are thinking of flipping in.
Next time - buying the right house to match your buying market.