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    How To Fix And Flip Myrtle Beach Real Estate

     

     

     

     

    Some of the Keller Williams The Trembley Group Real Estate Professionals are real estate investors in addition to being licensed real estate professionals for the top real estate brokerage in Myrtle Beach and along the Grand Strand. They love selling houses and helping make their clients’ dreams come true, but they also enjoy buying houses, cleaning and repairing them, and selling them for a profit. As a group, the Keller Williams The Trembley Group Real Estate Professionals have fixed and flipped quite a few houses. They’ll also be the first to say that it’s also possible to lose a lot of money if an investor doesn’t do their homework or rely on sound market advice.

    Fixing and flipping homes may seem like a pretty simple concept. Buy a house that needs a little work, fix it up, and sell it for a profit. What could go wrong, right? The truth is it takes more than a bit of time to find the right property at the right price, find the right financing, find the right contractor, decide what to repair, maintain the property, value the property, make sure to complete all the needed repairs right, and then sell the house. Fix and flipping is not something casually done successfully, working a couple of hours per week. Not taking the time to do things right and getting lousy advice can turn a nice fix and flip profit into a big loss.

    How Much Money Can Be Made Fixing and Flipping Homes?

    Fix and flipping houses is not an easy side job that makes investors a fortune while they continue working their day job. Many folks see fixers and flippers on television who seem to make $100,000 on every fix and flip, never getting out of bed until noon. But television can be deceiving. Unless an investor is dealing with high value/high-risk properties, it is rare to make $100,000 on a flip, at least in Myrtle Beach real estate. Most of the television shows leave out many of the costs associated with a flip and overstate the profits.

    Can Money Be Made With More Expensive Fix and Flips?

    It’s only common sense that fix and flip Myrtle Beach real estate investors know that it’s possible to make more money fixing and flipping expensive houses on a per deal basis. But, an expensive house will come with considerably more risk and more costs. Even though it’s possible to make more money on an expensive flip, as a group, the Keller Williams The Trembley Group Real Estate Professionals prefer less expensive flips for several reasons.

    • An expensive flip will require a larger down payment. A house that costs $500,000 will require a $125,000 down payment.
    • High-end buyers have higher expectations, so in general, an expensive flip will need more repairs. Materials and labor will be more costly, and the repairs will likely take longer on a high-end flip. It will be harder to find contractors qualified to make high-end repairs, and those contractors generally charge more for labor.
    • High-end flips usually take longer to sell than less expensive properties. The market for less expensive homes is broader and more profound. More people can afford less expensive homes. Plus, they are easier to sell. The financial carrying costs and the longer holding periods associated with an expensive house will be much higher than the finance and holding costs associated with a less expensive property.
    • It is more challenging to value high-end properties. A key to fix and flip success is knowing the value of the house once repairs are complete. Most high-end houses are unique, and there are fewer comparable sales to provide an accurate estimate of value. A 10% error on the value of a $600,000 house is a $60,000 mistake!

    Most Successful Fix and Flip Investors Prefer Many Low-End Homes Over One High-End Home

    Since there’s potential for many unforeseen issues when flipping homes, most fix-and-flip investors prefer to have five $150,000 flips over just one $750,000. Anyone who has been in the fix and flip business knows someone who has lost money on a flip. But when a fix and flip investor has several homes, it doesn’t hurt as much since the other flips make a profit and make up for the loss. If a fix and flip investor has one high-end flip that loses money, it has disaster potential because so much money is tied up in one house.

    A Pawleys Island investor started in 2005 buying low-end fix and flips in Georgetown. Most of what he purchased sold quickly and what didn’t sell soon rented. He was doing well, and in addition to a profit on a dozed homes, he had also acquired a half dozen rental properties in two years.

    There’s no diplomatic way to put it except to say the Pawleys Island investor got greedy. He bought a Pawleys Island marsh front property requiring hundreds of thousands of dollars of repairs and improvements. Then came the market crash of 2007. The house didn’t sell. Lawyers got involved, and it took just under a year for the courts to settle the case.

    If the investor had stuck with his business plan of multiple low dollar flips rather than having all of his capital tied up in a near million-dollar marsh front property, he’d probably still be buying and selling houses today. Instead, since everything was tied up in a single high-end flip, he lost his portfolio of rental properties, lost his investment to foreclosure, and his company went bankrupt.

    An investor would need about $125,000 in profit on a high-end flip to equal the profit of five low-end flips. After expenses and repairs, a house bought for $500,000 would need to flip for over $800,000! Experience says it is much harder to find that much wiggle-room in high-end property, while it is much easier to find a $120,000 house that will sell for $160,000.

    How to Repair a Fix and Flip

    After finding a fix and flip, an investor is faced with repairing it. Many investors start by assuming they’ll do the work themselves. Most Keller Williams The Trembley Group Realtors don’t suggest it, unless an investor has the luxury and leisure of no job and expert remodeling and carpentry skills. Many first-time investor’s flips go bad because the investors think they can remodel a home themselves on the weekends and save thousands. A person’s time is worth something and they’ll likely lose money if they aren’t a professional contractor.

    It will take the weekend warrior ten times as long to fix and flip a home like a professional, and the financing costs will quickly eat up all the profit. A 150,000 house, might qualify for a $112,500 mortgage. Financed at 5%, the house will cost the investor $470 per month in interest alone, and that will quickly add up. And that’s not to mention that the investor’s family will probably hate never seeing them. One Keller Williams The Trembley Group Real Estate Professionals like to tell the story of the first fix and flip he did on his own, and about all he learned that he didn’t know about construction.

    When planning on repairing a fix and flip, an investor should get bids from multiple contractors. Try to use a few contractors that have been highly recommended by trustworthy friends and professionals. Be certain to get everything in writing.

    Basic Guidelines for Repairs

    1. Always make sure the home will qualify for financing – all the major systems work, there are no holes in the walls, and there are no safety issues.
    2. Look at the condition of other homes that are competing with the fix-and-flip. The fix-and-flip needs to be just as nice as or nicer than the competition if it’s going to sell for the top of the market.
    3. Finally, and most importantly, don’t over improve for the neighborhood. The fix-and-flip buyer will certainly need financing, and their financing will require an appraisal. If an investor is trying to sell the fix and flip at the top of the market – for more than any other home in the neighborhood – the appraiser will have no comparables to justify the high price. If the appraisal comes in low, the investor may have to lower the price or find a new buyer. Remember, an FHA appraisal will stick to a house for four months!

    Selling a Fix and Flip

    After all that work crunching the numbers, finding a sound investment, and repairing and remodeling it, it’s finally time to put it on the market and sell it. It’s almost the end! Selling a fix and flip is simple. Most fix and flip investors will list it with the Keller Williams The Trembley Group realtor that they trusted to sell them the property. The Real Estate Professional was the best real estate agent to sell them the property, and the investor can trust their value to sell the property. Many people want to save a commission and list a house themselves, but it usually costs the seller more money in the end than the agent’s commission.

    And if a seller thinks they can save an entire commission, they are most likely wrong. A real estate agent represents most buyers, they will have to pay at least the buyer side commission. The seller will only save half of the commission. Plus, the buyer will have representation, and the seller will not. The buyer will have an advantage. Real estate contracts can be extremely complicated, and a seller needs a professional to help them understand the contract and the process. So if not a Keller Williams The Trembley Group Real Estate Professional, the fix and flip investor will be paying a real estate attorney. 

    Valuing a home is even trickier, and it’s a Real Estate Professional’s most important job. If a house is overpriced, it will likely become stagnant, and buyers will begin to wonder what’s wrong with the house. If a house is underpriced, a home seller will leave money on the table. A Realtor will know exactly where to price a home so that it sells quickly, but not too fast.

    A Few Practical Tips

    Setting out on a fix and flip adventure is an exciting prospect. It’s a new business venture that has the potential to increase an investor’s income substantially, not to mention developing investments can help support a family long-term. By following a few essential tips, a fix and flip investor can get started on the right foot for an effective investment and set the stage for a more positive ending.

    Tip #1: Develop a Great Relationship with a Contractor

    A real estate investor who is planning to fix and flip houses long-term will need a great relationship with a trustworthy contractor. The contractor should be someone with experience in the area where the investor intends on purchasing your fix and flip home. They will provide accurate and trustworthy estimates so that investment decisions can be made quickly.

    Tip #2: Know Your Limits

    Many people think that investing a little sweat equity in a fix and flip house is a great way to save some money and increase return on investment. In most cases, labor is one of the most expensive parts of fix and flip construction. Before even starting, make sure you know your limits. Diving in with a project that’s too much for your abilities and capabilities is a sure recipe for financial disaster when a contractor has to be paid to fix the investor’s mistakes.

    Tip #3: Find the Right Realtor

    OK, here it is – the advertisement – but this may be the most important part of the fix and flip success formula. Any Myrtle Beach fix and flip real estate investor will need a Keller Williams The Trembley Group Realtor who knows the local market and who understands local market value. A great real estate professional will help secure a house at a bargain and understand the value of the improved property. Remember that a Realtor needs to understand the value of homes. And while they might not know exactly what it will cost to repair and remodel a house, they will see the value of the renovated home and everything that will be necessary to help it sell.

    Tip #4: Have the House Inspected

    Skipping a home inspection can be an extremely costly mistake in the fix and flip process. Choosing to have the home inspected, an fix and flip investor learns precisely what a home needs to be habitable. It also gives the fix and flip investor a clear idea of how much the renovation process will cost. Another objective, unbiased, and expert set of eyes never hurts when investing a substantial amount of money and time.

    Tip #5: Know Your Budget

    Before starting an expensive renovation process, a fix and flip investor needs to know their budget. A budget for a fix and flip house is different from a remodeling budget for a home where you plan to live. One should look at a fix and flip as a short-term investment. It should be a house that can sometimes be cosmetically remodeled with a coat of paint and a thorough cleaning. Remodeling a fix and flip should cost significantly less than making a home ready for the investor to live.

    Tip #6: Check the Whole Neighborhood

    The house’s neighborhood can have an enormous impact on the selling price. The community needs to be one that is growing: where many homes are being remodeled and turned around. Ideally, the house needs to be near others that have already been renovated and repaired, not one that sits next to the neighborhood eyesore. An investor should be sure the immediate neighborhood is not located on a major thoroughfare and that your house isn’t surrounded by excessive noise – noisy dogs, traffic noise, trains, airplanes, and more.

    Tip #7: Develop Patience

    Fixing and flipping houses isn’t an overnight process. There will be delays, and there will be times when it will be a struggle. There will be times inspections go wrong, renovations don’t go according to plan, or a house sits on the market longer than anticipated. With patience, however, fixing and flipping houses can become a satisfying source of extra income.

    This article has just scratched the surface of fixing and flipping Myrtle Beach real estate. There is much, much more that could be written about how to make money fixing and flipping homes, but the best teacher is experience. The best strategy starting out is to honestly assess financial and personal assets and then make an appointment with a myrtle Beach Real Estate Professional at Keller Williams The Trembley Group.

    Learning to fix and flip houses effectively is a process that takes time. By choosing the right properties with the help and advice of a Keller Williams The Trembley Group Real Estate Professional, a fix and flip investor can develop an effective and profitable strategy.

     

     

    Need help? Call Keller Williams The Trembley Group at 843.945.1880 ext. 1 and we’ll help you look for the perfect listing or buyers agent

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    At Keller Williams The Trembley Group, we pride ourselves on being the experts at more than just selling real estate. We are local residents, some of us have been here for a lifetime. The rest of us will be here until the end of time. We love living, working, and playing in the diverse backyard of Coastal Carolina, and look forward to helping you live and love your dreams soon too. Please reach out to us by phone or email for personalized 6-star service and one-on-one advice. 

        

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