When you fix and flip homes, the key to success lies in how quickly you can sell the home. Here are 6 tips to sell your fix-and-flip quickly.
The average fix & flip takes six months to sell. Most investors will use that fact in their revenue projections to ensure their business stays afloat during that half a year and will try to hedge their bets that they can hit that deadline on time. But what happens if you go past that six months?
Getting stuck with your investment property means increased carrying costs and less profit. Carrying costs include the regular fees you’ll need to pay while you maintain ownership of the property, like utilities, interest on your loans, maintenance, etc. Those small fees can eat into your profits faster than you think, so it’s critical you unload that house quickly. But how?
I’ve figured out six critical factors you need to pay attention to if you want to sell a fix & flip in six months or less. I’ve seen The Investor's Edge clients use these tips repeatedly to come out on top, so I know they’ll work for you, too. That’s the good news. The bad news is they’re going to take a little work on your part but will pay off dividends by getting your property sold. What are these magical tips? Let’s dive in.
The Six Factors that Can Get Your Fix & Flip Sold as Quickly as Possible
Tip 1: Determine Your Potential Buyers’ Profile
Real estate investing may have its quirks, but in many ways, it’s no different than any other business. To be successful, you need to understand who your target market is and what pain points you can solve for them. When you’re dealing in fix & flips, you need to know who it is you’re flipping this house for and what problem it solves for them.
You’re probably thinking, “Um, Ryan, it solves the problem of them having nowhere to live,” right? It’s so much more than that, though. Is your ideal buyer a family looking to upgrade from their cramped apartment and move into a better school district? If so, that condo you’ve been eyeing up probably isn’t going to work. Or maybe you’re envisioning your buyer having the joy a first-time homebuyer gets once they get the keys in their hands. If that’s the case, can your ideal buyer really afford that four-bed, three-bath Victorian monstrosity you’re considering?
Know who your ideal customer is and see your potential properties through their eyes.
Tip 2: Improve the Property Specifically for Your Audience
There’s a fine line between rehabbing and overhauling, so if you want your house to sell quickly,four-bed, you’ve got to walk that line accordingly. Improving the home too little, and you’ll scare away buyers that aren’t handy or worry too much about the cost to fix their new home up. Overhauling the property too much, though, and you’ll skew someone’s vision for what “could be” too far. Have you ever seen those house hunter shows where someone’s turned off simply by a paint color? It happens more than you’d hope, and it’s incredibly frustrating.
Your upgrades should be useful yet neutral and designed for your ideal customer’s needs. An upgraded kitchen that has lots of counter space for family meal planning? An excellent choice when your target audience is a growing family. Smart home features and fiberoptic internet? Perfect additions for Millennial and Gen Z young professionals. The more you’re able to tailor your rehab to what your ideal audience is looking for, yet still giving them enough room to envision the future for themselves, the faster your property will sell.
Tip 3: Work with a Specialized Real Estate Agent
Both my wife and I are licensed Realtors, so we know the difference an excellent real estate agent can make. You might balk at the thought of handing over a 6% commission, but hiring a pro to source buyers for you and handle all the haggling that comes along with real estate is well worth the investment.
Consider this from the perspective of an entrepreneur. When you’re running your own business, you’ve got a lot of plates to keep spinning in the air, right? Think of how much time it takes to run your business, source properties, handle contractors, pay your bills, etc. Do you really want to add the additional time-suck of being the real estate agent, too? All the entrepreneur gurus would tell you to do the things that grow your business and leave the rest to those who can do it while focusing on what’s important.
Hopefully, you get my point for why a real estate agent is a crucial piece of your business. But just any agent won’t do (unless you’re in a super small market). Ideally, you should work with agents who have extensive experience selling properties that your ideal customers are looking for (there goes that “ideal customer” thing again!) because their knowledge of what’s hot for each demographic can make all the difference. Experienced real estate agents will know which neighborhoods are moving for buyers like the ones you’re targeting and the main issues they’ve had finding that perfect home for their situation.
You don’t know what you don’t know…you know? Getting a real estate agent who has a successful history selling to the people you’re targeting can give you insight and help prevent any blind spots from coming up that keep your house from selling.
Tip 4: Research Comps and Price Your Property Competitively
Pricing your home correctly can mean the difference between selling for a large profit and facing an REO situation. Sadly, most first-time flippers stumble at this step. Your agent can help you price your home in such a way that both entices buyers and earns a solid return on your investment.
The best place to start is right in your property’s neighborhood and research comps (comparables). Look up how much other homes sold for and how long they stayed on the market. This can help you pinpoint a reasonable price range to make your property competitive. Remember, the faster you sell your home, the less your profits will be affected by carrying costs like utilities, insurance, and interest on your loans. Don’t get too greedy here. Better to make a fast nickel than a slow dime, especially when that dime ends up being a nickel due to carrying costs.
I like to keep things within one mile and one month when looking for comps. The closer a comp is to your home, the more likely your neighborhood is desirable. The more recent the sale, the higher likelihood the selling price will work for your property, too
If one mile and one month don’t work, you can expand your search but keep in mind you’ll need to compromise a little. Location and time matter, so don’t expect things to be the same for you when you’re ready to sell. Above all, do not go higher than 10 miles or six months out. The data will be too skewed to be helpful.
Tip 5: Stage It Up and Show It Off
You might think that leaving your investment property empty creates a blank canvas that makes it easier to sell. Well, Homestagingresources.com did a little research for us and found some interesting statistics:
- Over half of Seller’s Agents believe the staging increased the value of the home 1% – 20%
- Over 77% of buyers find it easier to visualize the property as their future home when it’s staged
- 40% of buyers are more willing to walk through a staged home they saw online
- Almost one-third of buyers are more inclined to overlook property faults when the house is stage
So yes, dig that sofa out of storage and stage your investment property because that blank canvas isn’t doing you (and your revenue) any favors.
Remember that you’re not selling a property as much as you’re selling a solution to your buyer’s problem. To help them envision that solution, you’ve got to tell a story and build a world in which they can see themselves living their best life. It’s starting to sound a little like video game development and not real estate selling, but hopefully, you get my point on how critical it is that you take the time to set the scene that makes it easy for your buyer to want that life here in your fix & flip.
But like rehab vs. overhaul, you’ve got to balance the staging of your investment flip, too. Don’t go into full-blown interior decorator mode when you stage the home. To stage successfully you’ll want to add just a few pieces of furniture and an accent here and there to give the house a more cozy feel.
When you’re planning out the staging, focus on these four main rooms:
- The living room
- The master bedroom
- The dining room
- The kitchen
Why? Homestagingresources.com to the rescue, again! Here’s what they’ve found when they asked buyers just how critical it was to see each room staged:
- 86% of home buyers consider a living room important to have staged
- 84% of home buyers consider a master bedroom important to have staged
- 71% of home buyers consider a dining room important to have staged
- 68% of home buyers consider a kitchen important to have staged
No matter which stat you look at, the majority of buyers surveyed saw the room being staged as a critical factor for whether they moved ahead with an offer or not. Remember to keep it simple, but paint a picture that shows them what life could be like in this new home designed just for them.
Tip 6: Don’t Be Afraid to Get Out and Spread the Word
Online ads and social media aren’t just for influencers and e-commerce; they could make the difference between selling your property in a week or a year. You might not think that marketing is a big part of real estate, but it’s as critical to this industry like any other, so you’ve got to learn the ins and outs of successful marketing tactics.
There are so many ways to market your business and your inventory now that pretending it’s not an option hurts no one but yourself. Marketing doesn’t need to mean flyers on telephone poles or sponsoring the local youth little league if that’s not your thing. It can mean networking with others in your area who can connect you with potential buyers, running seminars that talk about real estate trends, or even just regularly posting behind-the-scenes updates on a social media account that you run.
One tip: If you’re planning to run social media ads, you really need to know who you’re targeting, so don’t skip the first tip here: do the work and create that avatar! The more you’re able to narrow down your avatar (the people you’re marketing to), the cheaper your ads will be to run. When it comes to online advertising the smaller the audience, the better. Getting it wrong can blow your entire year’s worth of advertising in the first week.
Carrying costs are the biggest driver keeping you from earning that revenue you so rightly deserve. The sooner you can get that investment property sold, the lower your carrying costs will be and the more profit you’ll generate. Use these six key components to ensure your inventory gets flipped quickly so that you’ll become successful as soon as possible.
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