One of the keys to successful real estate investing is spotting hot properties to fix and flip and being able to move on them before your competitors do. This requires knowing the community you want to invest in – intimately. For this reason, most investors begin their careers close to home, buying, fixing, and flipping houses in their area. If you are ready to maximize your profits, it could be time to branch out of your local community. But how do you know where to go?
To start, here are 5 signs you’ve found the perfect fix-and-flip community:
Fix and Flip Win #1: Low Foreclosure Rate
Finding a community with few foreclosures is a good sign for a number of reasons. First, it means homes in the area won’t depreciate due to vacant houses. Buyers will have fewer purchasing options; you won’t be competing with short sales and REO properties when you go to flip the house. A low foreclosure rate may also be a sign that the community is on the rise, and you’re getting in at the right time to take advantage of – and aid in – the revitalization.
On the other hand, don’t completely rule out communities with multiple distressed properties, because you could snag great deals with less competition from other investors. If the community exhibits our three other signs of a good “fix and flip” area, you could be on the cutting edge of the revitalization.
Fix and Flip Win #2: Good Schools
Most buyers look for a “good” or high-ranked school district. Even for older buyers who no longer have young children, or buyers who don’t plan to have kids, a good school district is often indicative of a friendly, low-crime neighborhood. You can find details on specific schools and districts at the website GreatSchools.org.
Fix and Flip Win #3: Affordable Properties
While fix and flip investors can do well in luxury areas, there’s less monetary risk with a more affordable property. When you first foray outside your local community, look for areas where you can realize a profit with an affordable purchase, quick rehab, and fast flip.
Fix and Flip Win #4: Rapidly Rising Home Prices
It’s easier to “buy low, sell high” when home prices are rising. You may be able to save money on renovations and still realize a good profit faster, in an area with rapidly increasing home values. Use websites like Zillow and speak to other investors and real estate agents to determine how fast home values are rising in an area compared to the national average.
Fix and Flip Win #5: Buyer Demand
It’s common sense: Smart investors can all but guarantee a fast sale by purchasing fix and flip properties in areas with high buyer demand. What creates buyer demand? Rising employment rates (with jobs available in the area), good schools, low crime, and other features (such as being close to shopping) that may vary depending on the region. Look for areas with lots of lending activity, as this is a hint that you’ve happened upon a hot community.
Where To Invest?
It can be nerve-wracking to venture outside your local community as an investor, but the pay-off can be worth it. Many popular U.S. cities are rich with opportunities for investors.
For instance, the Florida cities of Ocala, Tampa, and Miami have been named by Forbes as some of the “most active and rewarding markets for flippers.” There are communities across the U.S. just like these fast-growing Florida towns, in need of revitalization and the boost a smart investor can give to an area. In return, you’ll reap financial rewards and the satisfaction of knowing you’ve made a positive change.
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