Wednesday, May 17, 2023 / by Sonya Reiselt
Flipping a Home in the Lowcountry? Follow These Tips!
Flipping homes in the Lowcountry is hotter than ever, with investors taking advantage of the combination of distressed owners and average mortgage rates to buy properties. Contrary to what you might think, you don’t need to have a ton of cash, or a ton of experience, to be successful at house flipping (but both definitely help). There are some important tips to keep in mind if you're thinking about flipping homes in Beaufort and the surrounding area.
Don’t expect to be in and out in a week
According to a recent ATTOM Data Solutions U.S. Home Flipping Report, home flippers who sold homes took an average of 174 days to complete a flip.
It may or may not take you that long to flip a home in Beaufort. The time it takes depends on a lot of factors, like the condition of your home, how much work needs to get done, and how fast you can make it all happen. The key is to be realistic. Overestimate the time it will take to get any permits, do any needed repairs, get your inspections, and get the home sold.
And keep in mind that the longer it takes you to flip a house, the more you’ll pay in carrying costs, which include utilities, financing, and property taxes.
Make sure you have enough money
The cost of flipping a home can vary based on where the home is located, the property type, and the extent of the renovations needed. The total cost to flip a house is usually around 10% of the purchase price. But that doesn’t mean your flip will come in right at 10%. If you don’t have a proper contingency fund, anything that goes wrong could put you over budget and sink any potential profit.
Avoid risky remodels
Taking down a wall may open up the space, but doing so may reveal horrible plumbing issues or faulty electricity or the need for a $10,000 beam to support the structure as soon as you do. Opening up the floor plan of an older home to make it more attractive to today’s homebuyers is a great idea, as long as you’re prepared for the potential problems.
Consider bringing in a partner
If you don't have the money upfront for flipping homes, consider a partnership with someone who can put down the cash and split the profit when the home sells. This is especially useful if you plan to buy homes at auction and need a lot of money upfront.
You can start with a home that just needs some touching up and basic repairs. Get your feet wet gradually and avoid huge financial risks up front that could derail your home-flipping adventure.
Learn some trades
Are you planning on doing all the repairs or updates yourself? If so, make sure you learn some of the necessary skills/trades beforehand to maximize your flip time. You don’t want to be learning on the job with money on the line.
Put together a team in advance
If you’re planning to have others make the fixes, due your due diligence. Get references and bids upfront then hire them before you close escrow. Time is money.
Don't let your ambition to flip a home cloud your judgment and jump at a listing that costs more than it should in regards to the profit margin. Set a limit and stick to it, based on what you can legitimately afford, and your expectations for your profit margin.
If you’re not sure how to set your profit margin, consider the 70 percent rule.
“The 70 percent rule states that an investor should pay 70 percent of the ARV of a property minus the repairs needed,” said Invest Four More. “The ARV is the after-repaired value and is what a home is worth after it is fully repaired.”
Flipping a home in the Lowcountry can be a great and prosperous adventure if you follow these tips.
Are you planning to buy or sell a home in Beaufort and the surrounding Lowcountry? Contact Sonya Reiselt today to find the latest homes for sale in the Lowcountry. And make sure to visit our blog every week for more Beaufort area real estate information.