What to Know About Flipping a House in Snohomish County
The real estate market is definitely an interesting roller coaster right now. From everything completely dropping off in March and April, two practically a total rebound in June, the real estate market in Snohomish County is doing quite well. And investors are also doing well as home flipping has reached a 14 year high.
According to ATTOM Data Solutions, a home-flipping report showed that 53,705 single-family homes and condominiums in the United States were flipped in the first quarter of 2020. That is 7.5% of all home sales in the nation up from 6.3% in the fourth quarter of 2019. Those of the highest numbers ever recorded since 2006.
The gross profit from these flipped homes also rose to $62,300 up from just $62,000 in the fourth quarter of 2019 and up from $60,675 in the first quarter of 2019. This is about a 36.7% return on investment. Home flipping has taken up a larger portion of the housing market over the last couple of years.
Here’s what to know if you’re considering flipping a home in Snohomish County Washington
You don’t need to spend a lot of money to get the right fixer. Most homes that were flipped in the first quarter of 2020 were sold for a median price of $232,000. Profits will be larger when the home prices are higher, of course, but it doesn’t have to be necessary.
You don’t necessarily need cash upfront either. The percentage of flipped homes purchased with financing dipped in the first quarter of 2020 to 40% from 44% of last year. While all-cash is usually king, there are lenders that specifically finance fixer-uppers and flipped properties.
Consider bringing in a partner. If you don’t have the cash for the down payment or all upfront, consider a partnership with someone who puts up the cash and then splits the profit after the property sells.
Start small. If you’ve never flipped a property before, buying something that’s going to need $100,000 worth of repairs might be biting off more than you can chew. New investors can learn as they go by starting with a home that needs just a little bit of repair or cosmetic upgrades and then work your way up to homes that need more significant repairs.
Never overpay. It can be exciting to start your first flipped but don’t let your emotions win over logic. You need to make sure where your profit margin is and not jump in over your head realizing this is not going to give you the rate of return you originally expected. While auctions can be exciting and fast-paced, sometimes it’s better to step back and do the research on the neighborhood, the repairs needed, and the home inspection before buying the property.
A good rule of thumb is that an investor should pay 70% of the ARV of a property minus the repairs needed or the after repaired value. This is what the home is worth after its fully repaired. If you keep this rule in mind, you’re more likely to make a profit.
For a list of fixer-upper properties or homes in Everett, Snohomish, Lynnwood and Lake Stevens areas, contact me below. Let’s find the right home for your investment needs.
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September 9, 2020 @ 3:02 pm
Many new home buyers have no idea what they are getting into when they buy a fixer. Great info!