The process of flipping a house starts with buying a home below market price, renovating it, and then re-selling it for a quick profit.
Today we are focusing strictly on high-end properties, in nice neighborhoods with the potential for higher returns. The Arcadia neighborhood has gone through a lot of renovations in the last several years and if you are fortunate enough to find a property in the neighborhood, it’s not likely that you will want to give it up, but some flippers recognize the value in a good flip.
You can potentially find a property through foreclosures, short sales, trust sales, or the properties just need a lot of work and the owners need to walk away from them.
These homes have a lot of advantages over lower-end properties. There are great opportunities to flipping luxury properties. Here are a few reasons, other than the obvious.
- They get a lot of Good Press
High-end homes and condos are eye candy. What does this mean? If you are rehabbing a beautiful, luxury house or condo and host an open house and for some reason, you don’t receive any offers the day of the open house, it will be very likely that you will receive a write-up in a real estate or architecture magazine or website.
If you’ve done a good job with your flip, the house will sell.
- Better Quality Product
Luxury and high-end properties are built using quality materials, and their owners usually keep them well maintained until they cannot afford to anymore.
This means less rehab work, shorter marketing and prep times and less risk.
- Better Communities
You are already one step ahead of the game because your buyers are already thinking, “I want to live here.”
By purchasing in a community that takes more care with maintenance and is in a safer environment you’ve eliminated one of the biggest challenges for real estate investors today; selling in a distressed run-down neighborhood and in bankrupt communities.
- Less Chance of Over-Building
When you rehab a house, you always have to think about building to the property values in the neighborhood. With luxury properties and neighborhoods, though, you’re looking at houses that have been built to be the very best. You won’t have to worry about over-rehabbing because everyone in the neighborhood has a beautifully updated house with a high market value.
- Better Performance
Higher-end properties are typically the last to suffer from foreclosures and defaults and the first category to begin improving when things pick up making this the ideal time to get in on the action.
- More Opportunities
Mortgage lenders have only recently really begun to push hard on the largest loan amounts and follow through with foreclosure proceedings. This means more high-end foreclosures with huge spreads, right as the market begins to pick up.
- Less Competition
As mentioned above as newer investors and big funds focus on midrange rentals and low end flips there is a lot less competition at the top meaning a better ROI on time in, bigger discounts and more time to complete due diligence and negotiate.
- Better Resale Market
A recent surge in jumbo mortgage lending suggests that bigger loans are becoming easier to get versus their conventional counterparts. In turn, this means a bigger buyer pool and faster flips for easier deals and more profit.