For those of you just joining us, this is the second post in a two part blog series on home flipping strategies. Click here to read the first post in this series.
…I’ve seen many investors spend a lot of money renovating their property, then list the home at a price that might very well reflect a reasonable desired ROI on the amount of money they invested in the renovation, but is unfortunately not supported by recent comparable sales data. It’s fine to try to list a home at a price that’s a certain margin above the most recent comparable sales, (especially when it’s significantly different from other recent sales in the subdivision) but not to try to list it too high.
One investor I know in Falls Church bought a bank owned home for $410,000 last spring, invested a lot of money renovating the property, and tried to flip the home by listing it at $699,900 in a subdivision where the highest sale over the past nine months was $550,000. This investor’s property was definitely nicer than that $550,000 sale, and his property compared well to some homes that had sold on the other side of town. However, buyers and their agents tend to focus like a laser beam on sales activity in the subdivision. Long story short, this home finally went under contract a few weeks ago after being on the market for months and experiencing several sizable price reductions, and the final listing price was $649,000. If I had to guess, it probably didn’t go under contract for more than $620,000.
Overall, the renovation work that is least expensive and offers the best ROI when it comes to home flipping tends to be kitchen remodels (granite countertops, new appliances, floors, etc.), bathroom remodels (granite, nice tile work, etc.), installing hardwood floors, crown molding, fresh paint, etc. That’s not to say that investors don’t benefit greatly from more involved work – each property is unique, and sellers bring multiple types of strategies to the table. These are just things to consider when crunching the numbers.
Are you a home buyer who is thinking of buying a home and flipping it? Perhaps you’re an investor who’s looking for your next deal, or maybe you’re a savvy first time home buyer who wants to buy an undervalued property in a great area, fix it up yourself, and flip the home to make a profit. Give me a call on my cell phone at 703-462-0700 - I would love to speak to you about your investment goals. I have a great deal of experience in this area and know a lot about various subdivisions and types of properties that offer the best ROI when it comes to home flipping.
Do you own a home and are considering selling? Contact me for a hassle-free, over-the-phone market analysis of your property. This will give you a good idea of its market value and will help you decide if this is a good time for you to sell.