Securing the Flip in a Low Inventory Market
Find It, Fix It, Flip It
March 31, 2021
Sarah Kirsch Richardson
Founder and CEO
7373 N. Scottsdale Road, Suite A100
Scottsdale, AZ 85253
At this point in our lives, we are all familiar with the fix and flip TV shows. You know, the ones that glamourize the flipping process and make everyone sitting on the couch at home believe they can “get in the game.” TV crews appear to show the process from beginning to end. The hosts will find the perfect property and explain why it’s good for a flip, discuss the opportunities during a walk through, and talk about which projects are good for increased or decreased spend. They’ll bargain hunt at local shops to find materials and they’ll consult contractors who will inevitably find some “bump in the road” along the way where an important decision will have to be made. And then, voila, it’s on the market and quickly sold for a pretty profit.
They’re beautiful stories told by talented people, but they generally gloss over one of the most important, and these days very difficult, parts of the process. In today’s market, finding a property that’s worth the investment of flipping is serious business. Overall low inventory has sent home prices on an upward trend with no end in sight. While the ROI margins are thinning, the margin for error grows.
So, I won’t lie to you – it’s a tough world out there for fix and flippers right now, even for the experienced ones. If you’re newer to the game, it’s never been more important to have a trusted mentor you can go to for advice. The last thing anyone wants is a money pit where you see no return. Below are some key tips to see success and secure a property in this low inventory market.
- Progress is in the Paperwork. Before you even think about looking for a property to flip, make sure you have your financing in order. Whether it’s cash on hand or preapproval for a loan, know your budget so you’re ready when the perfect property comes along.
- Know your strategy. In a low inventory market, there’s no time to hem and haw over making the decision to buy. You need to know the kind of property you’re looking for, your spending limits, and where you’ll find the ROI. That important mentor I mentioned earlier that you’ll need? Make sure they’re someone you can count on for (very) quick advice should you need it.
- Research. Part of your strategy should include identifying the geographic area where you’re looking to execute a fix and flip so you can bring focus to your research. Look at comps, familiarize yourself with the area, know the standard reasonable home price, and identify what would be considered a good deal. Because making an offer quickly is key, you will feel more comfortable doing so if your research has made you an expert in specific areas.
- No hesitations. The previous tips very much relate to this one, but it’s so important that it deserves its own callout. I can’t stress this enough. In a market where inventory has seen historical lows, it’s a revolving door of houses that go up for sale and then are immediately scooped up. You MUST be ready to act if you see the property you’re looking for.
The fix and flip market may be fickle, but if you know what you’re looking for and you’re prepared to “pull the trigger” on the right property, you can find the wins you need to stay successful. Listen to the advice of your experienced mentor, trust your instincts, and stay close to the strategy and process you’ve identified.