Hardworking Philadelphia house flippers are making big profits in 2018. The city is growing, the economy is booming and neighborhoods are being redeveloped to meet the demand for good housing. It’s a fantastic time to be flipping houses in Philly. We’ve collected four tips from Philadelphia house flippers who are soaring right now.
#1. Be ambitious
House flipping hit an 11-year high in 2017 with Pennsylvania ranked as one of the leading states seeing an increase in the number of homes being sold to be flipped. Across the country investors saw an average gross flipping profit of $68,143, that is, an average 49.8% return on investment (ROI). But hold your beer because four of the five cities giving investors the highest ROI were in Pennsylvania! Philadelphia house flippers saw an average ROI of 114.1% in 2017. Work hard at finding deals with a great ROI because they are in our city. [Note: All statistics taken from the 2017 US Home Flipping Report by Attom Data Solutions.]
#2. Strive to be accurate on your rehab estimates
Nothing impacts your profit (or loss) on a flip more than your estimate of the rehab cost vs. the actual cost. If you underestimate it, you may pay too much for the house and then lose most of your profit when the rehab goes over-budget. If estimating the rehab work is killing you deal after deal, look to form a partnership with a contractor who could run the estimates (and the rehab work) for you.
#3. Network with other Philadelphia house flippers
By joining your local real estate investors club, you can meet and get to know other Philadelphia house flippers, wholesalers, buy-and-hold investors plus other real estate investing professionals, like title company reps and hard money lenders. The good clubs focus on networking and education – there’s usually a good speaker or two doing a presentation on something helpful. While you can learn a lot from books and online videos, through networking you can learn about the best places to invest in Philadelphia, where flippers are getting the best results and why no one is buying on some streets but are buying all the properties on another street. You may even find a partner or lender for your next deal.
#4. Don’t over-improve
It can be tempting to keep renovating until the house is ready for you to move in yourself, but that’s not the goal. You’re paying a discounted price for a house that needs repair, then you’re fixing it up to resell it for a profit. If you’ve done your comparables, you should know the After Repair Value, and you can use that to cap your expenses. Why install quartz countertops and high quality hardwood floors when top homes in that area have laminate countertops and floors? You’re not going to sell a house for $400,000 in a neighborhood where good comps are selling for $300,000.
Summary
Follow these tips from Philadelphia house flippers and you will soar! It really is a fantastic time to be flipping houses in Philly.