There has been a rise in flipping houses during the pandemic but this has been followed by a steep decline in profits. The most notable causes are a lower supply of homes and an increase in renovation costs. Despite these obstacles, there is still room for profit – here is how to make sure you get your money’s worth:
Know the Right Locations
It is undoubtedly a great time to buy a house – but this isn’t true for every region or area. There are some areas where wholesale real estate investing is soaring and other areas where it is tanking beyond belief. Now is the time to do your research and figure out where most of your business is coming from.
At this particular point in time, flexibility is key. Avoid setting up shop in one place and figure out how you can find opportunities all across the country. While this can create certain restrictions such as finding labor and supplies, it will also give you the best possible advantage for profits.
Focus on Key Renovations
As the profit margin on flipping homes is shrinking, it is time to focus on the most important aspects of any home, rather than primping the space. This all begins with a home inspection to identify main issues such as structural damage, problems with the foundation, wiring, plumbing, etc.
Once you have a list of a house’s issues, focus on the ones that are most important. Don’t try to add or remove any elements just yet. Your main objective should be to fix the house up. Once the top priorities are taken care of, you can then consider other renovations based on how much you can make off the house based on the current market.
Create a Supply and Labor Network
If you are like most other people involved in wholesale real estate investing, then there is a good chance that you are either working by yourself or you are a part of a small operation. The issue with this is that you may not have the necessary connections for supplies and labor. Thus, you are paying market value and hemorrhaging money.
This is why it is time to start building up a list of contacts. Look at how you can make deals with each of them so that you can cut overall costs across the board. It is important to set up this network in any city or region that you may be working in.
Focus on Home Features of the Future
If you are still renovating houses based on what homeowners were looking for at the start of the pandemic, it is time to change tactics. Although most buyers would still love lots of space and features such as large kitchens, they are now more concerned with affordability.
The buyers of today are looking for centralized locations. Due to the higher costs of houses in such locations, these individuals are looking for less square footage to save money. As such, home buyer’s main focus is multi-purpose rooms. This is what you should be focusing on as well.
These are the main guidelines to follow to reduce the risk and raise the profits involved with wholesale real estate investing.
