Before you choose to flip property in Detroit, there are a few things you need to know first. Learn more in our latest post!
While the trend of flipping houses may have cooled off a bit, there is still a good amount of money to be made. In fact, many people do it full time and see amazing profits! That said, you need to be smart about the properties you are investing in. Not every property will make for a profitable flip. Keep reading to find some of our best tips for flipping houses in the Detroit area!
#1: Your Costs Will Likely Be More Than You Think
If you know this ahead of time, you will be able to plan ahead for the unknown. For example, when you are fixing up the property, you will likely find additional repairs that need to be made. Or you might want to fix up the front yard to add curb appeal, but find you have pests living in the yard that you need to deal with. There is always something, so pad your budget a bit. Some investors recommend adding an additional 20-30% to their renovation costs just to be on the safe side.
#2: Time Is Money
The longer you own the property, the less profit you will receive. Home ownership can be expensive. Between the utility costs, monthly maintenance expenses, property taxes, and homeowners insurance, you could be looking at some hefty bills each month. Your flipped house needs to be priced to sell, yet still high enough so you see a profit. You need to find this sweet spot in order to sell the house quickly. Make your improvements, without over-improving, and list the house for sale as quickly as possible.
#3: Not All Properties Are Worth It
Just because a property looks good on paper and is priced low, doesn’t mean it will turn a profit on a flip. The property needs to be in a good neighborhood where people are actively buying. You want people to be chomping at the bit to buy your home, not afraid to go to sleep at night because it is in a bad part of town. Just because you see potential in a property, doesn’t mean everyone else will. You need to think logically when flipping homes, and not simply trying to flip the properties you like. Remember: you are not the one living there.
#4: Understand Your Local Market
Who is buying in the area? Is it a retirement area, a family area or maybe a spot for young couples? Look at the data to see who the primary buyers are. Keep this information in mind when doing your renovations. An older couple might appreciate a walk-in tub, while a family might love having an additional bathroom or mud room. Find out who the buyers are and make the house appeal to them.
#5: Know When To Call A Pro
From repairs to the closing table, many property investors think they will be able to do it all on their own. You need to know when to put pride aside and call a professional. You shouldn’t attempt the big repairs unless you have construction experience. Your mistakes will only cost you more time and money in the long run. In addition, buying the wrong property will leave you stuck with a house you don’t want to keep. By buying from a professional such as Freedom Acquisition Management LLC you will be able to shop from a large inventory of homes, all in different stages of repair.