Thinking of flipping a house in The D? You know, The Motor City. Rock City. Motown. Hockeytown. We all know Detroit for its rich history in the automobile and music industry, but did you know Detroit is among the top five metro areas for flipping houses? According to a recent article published in the Detroit Free Press, metro Detroit was fifth with a 58.3 percent return average of the gross profit of the home price. Baltimore had the highest average gross return on average (ROI) – average gross profit as a percentage of the average original purchase price – at 94.1 percent, followed by Deltona-Daytona Beach-Ormond Beach, FL (74.7 percent), Ocala, FL (73.9 percent) and Lakeland, FL (62.5 percent).
So, if you’re in the market to flip a house, Detroit isn’t a bad place to start. There are a few important things you should know, however, before starting your house flipping project.
Educate yourself about the business of house flipping
If you’re planning on getting into house flipping then it’s important to know the business. Flipping a house is an investment, and as with any investment, it has to be carefully thought out. Think about when you buy a car. A lot of factors go into purchasing a vehicle, such as size, make and model, gas mileage, and financing. That’s not including all the interior features you may want. And much like buying a car, house flipping is something you don’t want to rush through. Make sure you know the basics and have a plan in mind.
There are plenty of resources available, such as books on the basics of house flipping. These include “The Book on Flipping Houses: How to Buy, Rehab, and Resell Residential Properties,” “Flipping Houses for Dummies,” and “FLIP: How to Find, Fix, and Sell Houses for Profit.”
Still looking for more inspiration? Look no further than Detroit native Nicole Curtis. Once a struggling single mom, Curtis started her own cleaning business to put herself through college. Now she’s the host of DIY and HGTV’s home renovation show “Rehab Addict.” While Curtis doesn’t feel she fits in the category of a flipper, she has a knack for bringing houses back to life.
Now that you know the ins and outs of flipping a house, you should probably go over some finances. After all, you’re going to need some money for a project this big. How much money? Well, that depends on the market and the type of house that you flip. In the Detroit Free Press article, Daren Blomquist, vice president at RealtyTrac, said the challenge for those flipping houses in 2015 will be finding inventory to flip. Detroit, however, is high on the list because it has a blend of distressed homes and buyers.
How much money you need also depends on your current situation. You need to know how much money you can invest on your own or if you need to seek the money elsewhere. While it’s possible to flip a home without money, it’s easier to do so with your own money. This could include money you have saved or a home equity loan, where a homeowner can take the equity of their own home and use it as collateral.
But if you don’t plan on using your own money, there are other options such as going to the bank and seeking out a loan. There’s also hard money lenders. These are people who lend to others at a very high interest rate. These types of loans are ideal for flipping houses because they tend to have a maturity rate of less than a year. For a list of hard money lenders in Michigan, click here.
Another option is private money. This money can come from family members, friends or anybody you see on a regular basis that is willing to lend you money in return for an interest rate.
Location, location, location
When it comes to real estate, location is everything. It’s the first thing people usually search for when they’re looking to move. And in terms of flipping a house, you want to choose a location that will make the house more appealing to a potential buyer. Consider a neighborhood with close proximity to entertainment, grocery stores, leisure activities, medical services, shops, and a good school district – because houses in a good school district sell more quickly. Detroit has plenty of these neighborhoods, including Boston Edison, Indian Village, and Midtown.
Invest in a contractor when flipping a house
If you’re anything like me, you like to try and do everything yourself. But when it comes to flipping a house, this is one job you don’t want to do by yourself. You can choose to, but it may take a while. In this case, think about hiring contractors. The more people you have the faster the job will get done, and you’ll want to get the house flipped as soon as possible so that you can get it on the market to sell. The faster you can purchase the property, flip it and then turn around and sell it, the more money you’ll make.
Waste management for house flipping in Detroit
With so much else that’s going on, it’s easy to overlook how you’re going to get rid of all the construction debris. Roll-off dumpsters are great for any home remodeling or renovation project. By supplying the dumpster, you can tell your contractors to cut the cost of waste removal from their estimates. Check out prices on affordable dumpster rentals in Detroit.
Now that you have these tips, it’s time to start flipping!