The Fix and Flip Strategies You Need to Thrive in This Robust Market

Posted by Michael Miller on July 24, 2018

The fix-and-flip market is going gangbusters, hitting an 11-year high according to statistics from ATTOM Data Solutions. If you’re an experienced flipper with a proven track record, now may be the time to put your investment strategy in high gear. Your experience, coupled with a wise and prudent business strategy, will likely give you a leg up as new real estate investors flood a rapidly improving market.

The widely accepted definition of a house flip is one that is bought and resold within one year. For 2017, transactions that fell into that category represented nearly 6% of all single family homes and condos sold. Not since 2007—the year before the housing bust—has the fix-and-flip market been so robust.

But those figures don’t mean all sunshine and lollipops for the experienced house flipper. When the market gets hot, competition gets intense with too many investors chasing after too few properties. That’s why it’s a good idea to adhere to proven strategies. Here are several ideas that will help you thrive during these best of times for the house flipping market.

Know Where to Swoop In

In a robust market, make sure you pre-identify the best geographic areas and the best neighborhoods for your fix-and flips. CNBC reports that various cities in Pennsylvania—Philadelphia, Pittsburgh, and Scranton, specifically—have some of the nation’s highest returns for house flipping. Other healthy markets include Cleveland, Baltimore, Baton Rouge, and Buffalo. WalletHub, meanwhile, lists such diverse locations as El Paso, Sioux Falls, and Fort Wayne as having great flip appeal.

Thanks to an improving housing market, nearly every city will have properties you can flip. The key is to zero in on specific zip codes, even on specific subdivisions or blocks. Keep a watchful eye so that when a property becomes available, you are ready to swoop in ahead of other potential buyers.

Line Up Your Money Strategy

While the house flipping market is hot, rising property costs have slimmed down the returns that many investors are experiencing. Some investors compensate by taking on two or three properties in the timeframe that they previously did just one.

Prudent financing, in which you leverage your good credit to maximize your portfolio and its profitability, will allow you to pursue simultaneous flips. However, this is a strategy you should only pursue if you feel you can do so efficiently, without undue risk and without putting strain on your investment model.

Have a Game Plan

As you expend more dollars for flip-worthy properties, it’s more important than ever that you have a solid game plan in mind for the remodel. Margins are leaner, so stripping a property down to its bones may not be your best move.

A better strategy may be to make limited but impactful updates that will appeal to price-conscious buyers. Focus on the improvements that homeowners are known to love—specifically, kitchens and baths—as this remains the best way to stand out amidst the competition.

Play to Your Experience

The basic rules of fixing-and-flipping still even in a robust market. Always get into to your flip at the best possible price in a desirable location, be efficient with the remodel, and sell quickly so you can move on to your next flip.

With a proven track record, you already have a good idea of what you need to flip a house successfully. Just do it better and with a keener, savvier approach than other flippers out there, and you’ll do well in this robust market.

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