The question ‘what properties should I buy?’ must be the most commonly asked of all questions by those coming to us for real estate education. The truth is that the answer does depend on where you are flipping houses to a large extent. At the end of the day successful real estate investing is all about the numbers, however there are a few basic rules that can keep you on the right track.
For a start you need to keep in mind that the easier it is to sell your homes the faster you can turn your properties into profits. There are benefits to niche marketing, however when it comes to buying properties you want to acquire properties that have the largest possible appeal to the largest number of people. The more potential buyers you have, the faster you will sell. For example, trying to flip a studio apartment in an area that is mostly attracting families with children is going to be much harder than moving a 3 bedroom home. The same goes for trying to flip an over improved million dollar home in area that has seen a big drop in average income levels.
In general you will find that purchasing the ugliest homes in the nicer areas will offer the most potential for profit. Often these homes just need a little clean up to improve their appeal and should be the core of your real estate investing strategy. This is easy when homes are simply in need of a little curb appeal of just updating items like flooring, paint and even kitchens and bathrooms.
However, things can be a lot different when it comes to structural issues and defects. If you don’t know what you are doing you can find yourself stuck with a home you cannot sell and mounting contractor bills that can grind your real estate investing business to a halt. The exception to this rule is if you have an excellent contractor on your dream team that can do the work cheaper than the competition and the structural issue is common in the area you are flipping houses in. In this case homes with structural issues can often offer the largest real estate investing profits.