Finding Your First Flip
So, let’s talk about searching for your first flip. There are so many things to think about – what do I even need to be looking for? What non-physical things do I need to consider? Who do I talk to? I feel like we’re about to begin skipping down the Yellow Brick Road!
A few things to consider when you begin looking for a property:
- Proximity from where you live – you don’t want to waste time driving an hour back and forth each time you visit your property (which will be often). Remember, time is money!
- Price point versus your proximity – okay, this might go against what I literally just said, but if you can’t pass up a deal, it may be worth it. Just do your calculations and see if it works with your budget or not!
- Retail areas – you will want to look for a project in an area that 90-95% have owners who actually live in the homes. Areas of town that are mainly rentals are harder to sell once flipped. If you’re wanting to hang onto the property to rent, also called a ‘turnkey’, this may work – but Bruce does not suggest turnkeys for beginner flippers. You need to make profits, in the beginning, to be viable, and rental properties trickle in profits slowly.
- Do your own research! - Your realtor will be able to find the properties, but once you know what you want, feel free to look around on MLS or realtor.com. It’s good to know about houses in the area or neighborhood of your new flip; know what they sell for, typical layouts of the houses, any known issues, etc. Gain familiarity with the area, because knowledge is power, y’all!
- Comparables and non-comparables with your flip - This goes hand in hand with doing your own research – it’s so important to know what kind of work is around you, so you don’t end up with a super basic house when everything around it is fancy – and on the flip side of that, you don’t want to re-create Versailles when every other house on the street is a patriotic Craftsman. Also, this will help keep your price points in check and avoid your house sitting on the market for longer than you’d like.
- Any (potential) issues with appraisals – Bruce is an appraiser by trade and warned me that any issues with an appraisal will hurt not only your price point and bust your budget, but will stand out as a major turn-off to potential buyers. Every sale with financing involved will require an appraisal, so be sure to watch out for common mistakes that could really hurt you in the long run.
- Check out the HUD home store! Who knows – you might just find a great deal on a foreclosed home. Be wary and really do your research on these properties, since a lot of time the listings are worded to make them move quickly. Oftentimes the repair rate on the listing is grossly miscalculated. The HomeSnap app may help you with this, too, providing blueprints and diagrams of homes around your property.
A few things that Bruce looks for specifically when he’s searching for a new property to flip:
- At least two bathrooms – one bathroom homes tend to sell much slower than those with two or more
- Square footage – the bigger, the better! Bruce likes to have the biggest house on the street or in the neighborhood, or at least bigger than most – this will attract the eye, and give you the most space to do excellent work! This will also help with your appraisal value and increase that profit.
- No split foyers - This is a personal preference for him because he likes to work on homes that are accessible for everyone. You open yourself up to a much bigger market if you have a zero-entry home.
- Oddball houses – for the eclectic homeowner! It has to be the right price for him, though. Some houses are going to be hard to sell no matter how funky it is…
- The age of the house - The older it is, the more it’s going to cost you to flip it. You’ll probably have to rewire, replumb, replace windows, level the floors, support the foundation, etc. These are all things that are completely avoidable if you buy a newer home in the first place! Sure, the oldies have charm, but don’t forget that you can totally give a newer home that same charm with your flip!
Finally, let everyone know that you’re on a mission to flip a house! Every lead counts, and you never know where your dream flip is going to come from.
Don’t put all of your eggs in just one basket. You can hook up with wholesalers – just call the numbers listed on the signs on the side of the road. They will add you to their email list and you’ll start getting their deals in your inbox ASAP!
Again, be wary of HUD or foreclosures, but definitely still check on them. Look everywhere, and don’t be in a hurry.
The perfect house will show up for you! If you let the numbers work, your time will not be wasted. You’re constantly learning and this is going to work out in your favor if you’ll just be patient with the process!
Happy hunting, Christin