Flipping homes is an investment strategy that can bear you many fruits, especially in San Francisco real estate. But since the COVID-19 pandemic reshaped trends and inventory, you might have to flip homes differently this year. Here are a couple of things you need to know.
Finding San Francisco homes for sale to fix and flip
Searching for the right home at a reasonable price is the first step in any house flipping venture. But with the housing inventory being relatively low, finding properties will take time.
Consider connecting with San Francisco real estate agents for any leads. You can also try finding off-market properties by checking:
- Expired listings
- Public records
- Real estate auctions
- Foreclosed homes
- Auctioned properties
Keep in mind that there are other people like you who are looking for properties to flip. Expect to play the waiting game and make several offers before finding the right property.
Do your research
Dipping your toes into the world of home flipping for the first time? While home flipping seminars (whether in-person or online) are helpful, these are not required. Everyone can flip homes. Just do your research.
You can get inspiration from watching HGTV shows, but one of the best ways to learn is to find a mentor with considerable experience flipping homes. Meet people and build your network. Consider collaborating with more experienced flippers to learn on the job.
Don’t forget to do your math
Before you make a profit from your flipped home, you’ll have to shell out some cash. Most flippers follow the 70% rule. As you look at properties, take into consideration the potential after-repair value (ARV) and the repair costs it will take to get there. Use these figures as your baseline when making an offer. Remember: you shouldn’t spend over 70% of the ARV minus repairs.
For example, the property’s ARV is roughly $400,000, and you need to spend $50,000 for repairs. Your buying price should not go above $230,000 ($400,000 x 70% – $50,000 = $230,000).
Apart from these expenses, you should also factor in the holding and closing costs. These include mortgage payments, property taxes, insurance, and HOA fees (if applicable). You’ll have to shoulder these until you sell the property.
Changing home design trends for 2021
- Open floor plans are out. Since teleworking is highly encouraged, buyers are looking for properties with more private spaces like home offices and study rooms.
- Neutral and light colors are in. Taupe, beige, and sand are trendy right now.
- Demand for smart tech and home automation in high-touch areas. Consider investing in smart techs like motion-sensor or voice-activated lights, automatic blinds, and hands-free faucets.
- Oversized tiles. Rectangular-shaped and oversized tiles will be in vogue this year. They can make spaces appear bigger.
- More focus on kitchens. Buyers are now looking for multi-functional kitchens with dedicated stations for drinking, working, snacking, etc.
Create homes buyers dream of
Let me, Amir Hardy, guide you through the process of flipping homes in San Francisco real estate this year. Call me at 415.602.0570 or email amir(dotted)hardy(at)compass(dotted)com.