Thinking About Fix-and-Flip? Read This First

If you’re thinking about buying an investment property, fixing it up and flipping it, this guide is the perfect place to start.

Thinking About Fix-and-Flip? Read This First

People make a good living by fixing and flipping houses in Knoxville, but it’s not a career choice for the faint-of-heart (or those who don’t have plenty of resources in their back pockets). This guide explains what it takes to find a great deal on a home and how to sell it quickly – we’ll leave the middle part about fixing it up to the experts.

How to Find a Great Deal on a House So You Can Flip It

First things first: You need to find an expert Knoxville REALTOR® before you start hunting around for your best investment. An experienced real estate agent will be able to help you find great deals – homes with good structures that you can easily renovate and sell for a profit. (Just make sure you’re not illegally inflating the price.)

You should follow the 70 percent rule if you want to make a living (or at least a decent profit) on fixing and flipping homes. The 70 percent rule says that you should spend no more than 70 percent of a home’s after-repaired value, or ARV, on a home that you intend to flip. That way, you’ll have enough cash to make the necessary repairs and still make a profit when you sell; the 70 percent rule helps to limit your financial risk.

For example, if you can sell a house for $150,000 after it’s repaired and you estimate that it’ll cost you $25,000 to get it up to par, the 70 percent rule says that you should pay about $80,000 for the house. ($150,000 x 0.70 = $105,000. Then, subtract the cost of the repairs: $105,000 – $25,000 = $80,000.)

Selling a Fixed-Up House Quickly

Most investors want to fix up homes as quickly as possible, then sell them at the highest possible profit. The best way to sell quickly is to work with an experienced Knoxville REALTOR who understands the market, how to strategically price the home, and how to market it to the right buyers. Your agent will talk to you about staging the house, which can be particularly important (staged homes sell for an average of 18 percent more than their non-staged counterparts do, and they sell quite a bit faster).

As a new investor, you may find these articles helpful:

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Thinking About Fix-and-Flip? Read This First