I started flipping homes back in 2009 and while I’ve learned a lot, the one constant is that nothing stays the same. More and more buyers are becoming increasingly knowledgable about homes and as a result flippers need to adjust their strategy to make sure they are selecting finishes that are in line with buyer’s expectations. As more and more buyers are watching HGTV and other home entertainment shows, they are coming to expect higher quality finishes. This is important because, if a home is not in line with these buyer’s expectations, it will take longer to sell or may sell for less vs. other homes on the market that have been renovated to a higher level.
So what does this mean for flippers? It means you need to be tight with your numbers. As construction and material costs increase, your profit margin decreases. As a result, you need to be certain you are basing your numbers on quality finishes fit for today’s home buyer when evaluating deals. In years past you could get away with apartment quality finishes and sell it quickly but buyers in todays market want a lot more. For example, in 2009 I could get away with using contractor pack cheap 12×12 porcelain tile, but I now use higher quality 12×24 tiles for flooring and smaller tiles for the shower walls. In the kitchens, I used to see flippers get away with laminate counter tops but most buyer want to see stone counters tops and to take it a step further, many want quartz stone because it is more durable than granite. This means higher budgets and lower margins.
Before you get into flipping homes be sure you have the right team and process in place that will set you up for success. I will be discussing how to do this in my courses and posts to come. Stay tuned for more!
