Flipping houses can be a profitable investment, but success often depends on choosing the right type of property. Here are some factors that typically make a house a good candidate for flipping:
**1. Location:
- Growing markets: Areas with increasing property values and development are ideal.
- Desirable neighborhoods: Good school districts, low crime rates, and proximity to amenities like shopping, dining, and parks are key.
- Urban and suburban areas: Properties in urban centers or suburban neighborhoods with high demand are generally better investments.
**2. Price Point:
- Affordable entry price: Look for properties priced below market value to ensure there’s room for profit after renovations.
- Middle-market homes: These tend to have a larger pool of potential buyers compared to luxury or low-end properties.
**3. Property Condition:
- Cosmetic fixer-uppers: Houses needing mostly cosmetic updates (painting, flooring, landscaping) are less risky and less costly to renovate.
- Solid structure: Look for properties with good bones, meaning a solid foundation, roof, and overall structure, even if they need interior updates.
**4. Size and Layout:
- Standard sizes: Three-bedroom, two-bathroom homes are often the easiest to sell.
- Functional layouts: Avoid homes with awkward or inefficient floor plans that require significant restructuring.
**5. Market Trends:
- Demand for specific features: Homes with popular features like open floor plans, modern kitchens, and updated bathrooms are more attractive to buyers.
- Energy efficiency: Properties that can easily be updated to include energy-efficient features are increasingly in demand.
**6. Potential for Appreciation:
- Up-and-coming areas: Neighborhoods undergoing revitalization or development projects can offer significant appreciation potential.
- Historical appreciation: Areas with a history of steady property value increases are safer bets.
**7. Comparable Sales (Comps):
- Positive comps: Ensure there are recently sold, similar homes in the area that support the expected after-repair value (ARV) of your flipped property.
**8. Low Competition:
- Undervalued properties: Homes that are not attracting much attention but have potential can be good opportunities.
- Off-market deals: Properties not listed publicly can sometimes be purchased at a better price.
**9. Renovation Potential:
- Clear improvement areas: Properties where specific updates can significantly increase value are ideal. Look for outdated kitchens, bathrooms, or easily modernizable spaces.
- Permittable work: Ensure the required renovations do not need extensive permitting that could delay the project.
**10. Financial Feasibility:
- Favorable financing: Availability of funding at reasonable rates is crucial.
- Manageable carrying costs: Consider the costs of holding the property during the renovation and sale process, including mortgage payments, taxes, insurance, and utilities.
Conclusion
The best houses to flip are those in good locations with strong market demand, priced below market value, and needing primarily cosmetic updates. They should have a functional layout, potential for appreciation, and solid comparable sales to support the anticipated after-repair value. Conduct thorough research and due diligence to identify properties that meet these criteria and offer the best potential for profit. Working with a team of experienced real estate professionals can also help you make informed decisions and increase your chances of success in house flipping.
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