This biweekly sponsored column is written by the experts at Gordon James Realty, a local property management firm that specializes in residential real estate, commercial real estate and home owner associations. Please submit any questions in the comments section or via email.
Reality shows, speaker circuits, how-to courses and book deals hype the dream of buying a house with improvement potential, revitalizing it and selling it for big profit. How much easier can making money be? According to these “experts,” one house can return as much profit to the savvy investor as an annual salary.
Of course, in reality, flipping houses is more involved than it appears. Prudent investors will exercise due diligence before spending a single dollar. They’ll also consult true industry experts, home inspectors and contractors to provide evaluations and cost estimates to compare against possible returns.
One of the biggest hurdles for first-time flippers is to balance the cash needed to buy the house with the cash needed to fund the rehabilitation. It is a big consideration and requires professional consultation to make a sound, profitable decision. Just consider the disclaimer for the A&E reality show, Flip This House: “Do not try this at home. It is for trained professionals. You will lose money.”
The difference between a flip and a flop
You are good with tools, have a flair for decorating and found a terrific bargain in an up-an-coming neighborhood – all the formulas for the perfect house flip. It is a no-brainer, right? So, where is the wrinkle? There are plenty of underlying considerations to evaluate before gambling on restore-resell investing.
- Location — This can make or break the deal for potential buyers. Newer neighborhoods are attractive but usually come with higher purchase costs. Look for neighborhoods that are nearly complete. It is very difficult to compete with builder incentives for brand new homes when you are selling a previously occupied home. Good bargains may be found in situations where a builder abandoned the development and a house needs to be finished. Older neighborhoods on the cusp of revitalization also present good opportunities for aspiring flippers, but may require more skilled repairs and modernization.
- Foreclosures — Many buyers interested in flipping a home look to foreclosures. Remember, if an owner couldn’t afford to pay the mortgage they probably couldn’t keep up the maintenance on a house. A foreclosed property may present a number of challenging — and costly — underlying issues for investors.
- Neighborhood crime — Crime not only affects the appeal of a house to potential buyers. It also affects the restoring and reselling process. Empty houses make a prime target. Theft, vandalism, drugs and squatters can add thousands of dollars and hours of time to the process of restoring a property for resell.
- Relative market value — An important consideration in restoration planning is the aggregate value of the neighborhood. According to experts, over-improving for the market is a big mistake house flippers make. If the average home in a residential area sells for $100,000, it isn’t wise to invest $100,000 in remodeling and upgrades anticipating a $250,000 sale. You’re unlikely to find a buyer willing to spend that much, and if you do, it will be tough for them to obtain a mortgage for overvalued property.
- Contingency plan — There is an old saying that any plan is only as good as the backup plan. This is especially true for investors looking to flip a house. Beyond the initial purchase and reconstruction costs there are ongoing mortgage payments, insurance, utilities and other costs of keeping the house in the event it fails to sell quickly. Many investors rent homes out for income until the market improves.
Restoring and reselling may be a great option for getting in to real estate investing for future financial gain, but, as with any speculation, a prospective buyer should first invest the time and effort to do necessary homework on the deal. Assemble a team of trusted experts: a lawyer, accountant, real estate broker and contractors. Despite the implication, flipping a house may not mean a quick profit. But with diligence and some good old-fashioned elbow grease, it is possible to come out ahead.
The real estate professionals at Gordon James Realty are experienced in all areas of real estate investment. With more than 30 years of combined experience, they understand the complexities of the market and can help with your property investment opportunities.
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Early Years Preschool is a small non-profit preschool and parents day out program that has served local families since 1992. Early Years Preschool is located in the Cherrydale neighborhood at 3701 Lorcom Lane.
Early Years Preschool offers part-time programs for young children between 12 months – 5 years old. Early Years also offers a 6 week summer program! The school day is 9:30-2:30, with the option of morning extended day offered at 9am. Families have the flexibility of registering for 1-3 days/week in their parent’s day out program (12 months- 2 year olds) and 2-5 days/week for their preschool program (3-5 year olds).
Early Years’ teachers provide a nurturing environment that promotes the development of a child’s emotional, social, cognitive, and physical skills. Creative and stimulating theme-based activities allow each child to develop and learn at his or her own pace through exploration and play.
Learn more about Early Years Preschool by contacting the admissions team at [email protected] or by visiting their website at http://www.earlyyearspreschool.org
Dreaming of small-town charm with big-city convenience? Look no further than 7156 Main St in Clifton, Virginia! Nestled just 30 miles from the heart of Washington D.C., this picturesque property offers the best of both worlds.
Escape the hustle and bustle of the city to find tranquility in this quaint, historic town. With its tree-lined streets and friendly community atmosphere, Clifton is the perfect place to call home. Yet, with its close proximity to the nation’s capital, you’ll never be far from the excitement and opportunities of urban living.
Imagine weekends exploring local shops, dining at charming cafes, and enjoying outdoor adventures in nearby parks. Then, commute to D.C. for work or play, soaking in all the culture, entertainment, and career opportunities the city has to offer.
Don’t miss your chance to own a piece of this idyllic lifestyle. Schedule a tour of 7156 Main St today and experience the best of small-town living near a big city!
Having worked with the likes of Gary Numan, DJ Neidermeyer lends authenticity a go-go. Enough to satisfy even the purists.
The Renegade boasts all of the virtues of Arlington’s premier music venues while providing bar bites that rival most restaurants