Cities all along the Front Range have been positively exploding in terms of home purchases in the last few years. In fact, Denver has seen so much construction in the last few years that we’ve consistently been at the top of lists for cities with the most construction cranes! If you’ve been following the news at all, you’ll know there’s a huge demand for houses at just about every price level. Given that, it’s understandable that many Coloradans have been thinking of diving into real estate investment — after all, HGTV makes flipping houses look so easy! Flipping houses can be a great way to see a faster return on your investment, but just because there are plenty of buyers doesn’t mean it’s the right time to take up flipping. Consider this:
So, here’s the thing about flipping houses: you have to have a property before you can flip it. That sounds like a pretty basic concept, and many of you reading may be rolling your eyes. But the important thing to remember is that if you don’t already have a property that’s begging to be flipped, you’ll have to acquire one. Having a high demand for homes is great because it means a higher sale price. But it also means being subject to those same higher prices each time you search out a property to flip. Finding a property will mean being discerning and timing your purchase well.
If you’re new to real estate and house flipping, it’s a good idea to find a realtor to work with who is savvy about market trends and what is happening on a micro-level. The buying and selling trends in the Denver Metro Area will be different from what’s happening in Fort Collins, Boulder, or Colorado Springs. Even more than that, the housing trends in Five Points or Stapleton may be distinctly different from what’s happening in Aurora or Broomfield. It’s important to know what’s happening on a neighborhood level because it might be wiser to buy in the fall in Stapleton versus buying in the spring in Aurora. It’s often helpful to look at what is happening in the business world, as well. Job changes and office moves are among some of the biggest reasons homeowners choose to move.
Keeping in touch with a micro-economy can help you get a better idea about when to buy, but it can also help you better determine what to buy. Finding and flipping a house in the $200s may be a quick and easy project, but if the big need in the area is for homes that are in the $600s, your investment may sit for a while — and cost you profits. Knowing the price range, type, and size of properties that are most in demand will give you a good idea of where you stand to make a better profit.
The money made from flipping houses is often called “sweat equity” for a reason. The money isn’t strictly from fixing up homes, it’s finding homes on which you can do most of the work yourself. After all, if you have to rely on contractors to do most of the work, you can anticipate that you’ll also be sharing your profits with them. Seek out properties where you know you can do most of the work yourself to better minimize profit sharing. However, remember that your hard money lender will likely need to see permits and inspection documents before releasing funds, so no cutting corners.
Putting It All Together
In reality, there is no simple, straightforward answer for whether now is the right time to invest or not. On the surface, the answer is yes. Recent market trends across Colorado point to price inflation offering serious profit potential. However, it’s not quite as easy as that. You’ll need to look at what local real estate market trends are, what’s available, and what’s within your wheelhouse to flip.
Once you’ve found potential properties, you will likely need to act fast. Some of the best investment properties can be found in foreclosures and bank auctions. However, that generally means you’ll need to be ready with financing quickly. Be prepared by finding hard money lenders to work with regularly. Contact the TABS, LLC team for hard money loans in Denver and across the Front Range.