There is no question there is money to be made in flipping homes. But, not all flips are successful. So, if you want to flip a property in Naples, Florida here are five of the many things that you need to know and consider if you are thinking about investing in a real estate “flip.” We are experienced in flipping properties and guiding investors with successful seasonal rental properties. Our most recent house flip sold at full price.
1.) You need to be knowledgeable about the property values in the neighborhood – both before any renovation (when you are buying the property) and going on the market after you have invested in improvements (when you are selling the property). Where are you getting your information about recent closed sales? Is your source reliable and accurate? Should you compare sales on a square footage basis? Are there other important factors which determine what a buyer will pay? What was the top closed sale price in the past six months?
The internet is not going to give you the depth of information necessary to make intelligent decisions. If you are tracking a neighborhood by looking at Zillow or Trulia, you are the road to a costly mistake. This is where you will benefit the most from an experienced Realtor who can negotiate the right price for a flip and be with you all the way from a well negotiated purchase to a successful sale.
2.) Deciding on what work will need to be done. Which upgrades will bring the most return? What are the buyers looking for? What are the trends in the market? What are the trends in the neighborhood? What features are the right ones to capture the buyers attention? You want those features but you don’t want to over invest for the neighborhood. Likewise, you will not get away with a “lipstick on a pig” approach. A flip does not mean you will replace/upgrade every feature in the home – choose wisely, stay within budget, deliver quality, and don’t get too greedy. Remember you are taking an ugly home, neglected or dated property, and creating an attractive and inviting home to buyers. So, you will need to decide which features to invest your $$$ in to offer the best package in the neighborhood price range.
3.) You will need a very detailed budget with estimates for work to be done. Where are you getting these numbers? Are you hoping to hire a general contractor to oversee the project or do it yourself? Give yourself enough time to price materials and get bids for the work to be done. You will be shocked at the difference in proposals for the same scope of work.
4.) The team you choose for the project will be an extremely important factor in your success. The Realtor you choose should be one that works regularly with investors and is knowledgable about the neighborhood where you plan to do the flip. Homework is important here – accurate and reliable numbers are mandatory for making good decisions. Pipe dream returns or exaggerated rental income will turn a flip into a flop. The contractor you use will have to be one that can deliver on time and within budget. The pool company (if you are adding a pool) is critical, etc. Again, an experienced agent can help you put the right team together.
5.) What do you know about the FEMA 50 percent rule? Are you familiar with FEMA regulations and how the 50% rule affects a renovation? This is vitally important in choosing the right house. Any mistakes here and you could be in trouble before you ever begin.
Call Tim at (239) 272-4848 to talk to an expert now. We have successfully provided professional guidance to many investor clients and we want to be part of your next successful flip or investment!