If you are wondering how to get started flipping houses, you should know that doing it involves more work than what you see on the shows. It is completely doable even for novices on the real estate market, but there are some buyer-related trends you need to follow to minimize the chance of turning a flip into a flop.
We give generations names to distinguish between their common lifestyle choices. For example, the current primary homebuyers—millenials—are increasingly turning to freelance employment instead of climbing the proverbial corporate ladder. What this means for real estate investors is that the home property market must now cater to the needs of buyers who need something more than a place to eat and sleep—they also need a home office. On the other hand, another related popular trend is digital nomading or working without having a homebase, only spending a couple of months at a place. For many digital nomads, owning a home is a un unnecessary liability that comes with property taxes and maintenance costs.
At the same time, Forbes quotes research by the online rent marketplace Apartment List which found out that homeworkers “are 27% less likely to be renters than the general population.” One reason for this, the article points out, might be that “work-from-home professionals make 28% more than traditional workers and commuters.” On the other hand, home ownership among millennials is 8% down from the average rate for Baby boomers and Generation X. What do these numbers mean for your house flipping business? You need to pay attention to the generational and professional characteristics of the buyers to which you are selling.
Commodity prices have been rising, with oil and metals seeing the highest surges. Inevitably this affects the construction business, which comes with implications for your house flipping profit. More expensive materials mean more expensive renovations, but luckily for you, experts advise house flippers to abstain from extravagant and expensive renovation projects. Contrary to what TV shows present, the average buyer stays away from posh remodels which come with a higher cost, expensive maintenance, and constrict buyer’s freedom to personalize their new home.
Moreover, one of the house flipping tips that experienced flippers give is not to undertake extensive renovation projects. To get a more hands-on idea of what to expect you should read the Book on Estimating Rehab Costs by J. Scott, author of some of the best books on flipping houses.
Infrastructure and Accessibility
Car ownership has also been redefined by current generations which means that the need for access to parking spaces and garages is already taking a hit. Ride sharing services and personal transportation alternatives like electric bikes and scooters come with lower maintenance costs and an added benefit of being more forgiving for nature. Another thing that will change how people shop for homes is the growth of e-commerce with its same day delivery, experimentation with drone delivery and convenient return policies. Therefore, proximity to shopping centers will become a less and a less important factor in home purchases.
Political and Economic Conditions
Times of turmoil naturally affect the real estate industry, though there the relationship goes both ways. Thus, to make smart house flipping investments, you need to keep an eye on where the country’s political leaders are headed and how the property market is affecting the economy. For example, as of March this year applying for a mortgage as self-employed got easier when applying with some financial institutions which “could have benefits for home buyers, sellers and realty agents that may not be immediately obvious.”
What is the most common house flipping mistake that leads to losing money? Not paying attention to what the market is telling you. It’s an involving and constant process, but paying attention to the signs is what makes the difference between a winning and losing house flipping deal.