4 Keys to House Flipping Success in a Down Market

Tarek El MoussaBlog, Budgeting, Flipping Houses, Real Estate Business0 Comments

A man juggles houses

success path, success path education, financial success, christina el moussa, tarek el moussa, start a real estate business from home, real estate investingWhen Christina and I started flipping houses, the economy was in the dumpster, and we had our future to think about. We had to figure out how to make money in real estate fast, which meant that we couldn’t wait on the market to shift back in our favor. We’d both built our careers in real estate, and we knew that we didn’t have much choice but to make it work and figure out a financial success formula that didn’t depend on a really great real estate market. That’s why we got into flipping, and if you keep a few key elements in mind, you’ll be able to flip in any market.

Know Local Market Trends Before You Buy

If you haven’t researched the market trends in the area, you’re not going to have a good idea of what the ARV (after-repair value) will be on your property. Going in without a good idea of your profit margin is a great way to lose money, so it’s a bad idea no matter what the market is doing.

If you know that the market for the property you’re interested in has taken a downturn, you can use that when negotiating with the seller. You can bring them the numbers on what houses are selling for in the market and offer to pay a reasonable percentage of that, depending on the property’s rehab needs. Doing this shows that you’ve done your research and are giving them a fair offer.

Look for Catalysts in the Area

Even if the market is down, if there’s a new, attractive grocery store, shopping center, school, or park in the area, your property’s neighborhood is going to be more attractive than others in the market. That means you’re more likely to sell a rehabbed home near one of these market catalysts (buildings and/or features that drive people to an area and then drive the market up) than one that’s farther away or in an area with no real catalysts.

Get Creative With Your Rehabs

This is Christina’s favorite part of any job, since she’s really the designer in the family, but I like it a lot, too. Even in a down market, if you get a great deal on a flip house and you stay within your budget, your rehabs can make all the difference when you sell it. When the market is down, you’re going to see people looking for great deals on their next homes. Those people are going to be especially attracted to newly renovated homes with really cool updates to floor plans, fixtures, and appliances.

Have a Property Management Company on the Line

Sometimes houses end up sitting on the market, even if you do everything right. In these cases, you can go with a temporary exit strategy if you have a relationship with a good property management company. Call them up and get them to find tenants for the property. You can gather monthly income on it until the market turns around. Then you can go back in, make any necessary repairs, and sell it at a great profit in a better market.

If you’re trying to find out how to make money in real estate fast, keep these tips in mind. They’re an important part of the financial success formula that Christina and I came up with when we started flipping houses in the worst real estate market that America has seen in our lifetime, and they’ll get you through just about any downturn, too.

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