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The Process of House Flipping from an Investor’s Perspective

Flipping houses can be a lucrative venture for real estate investors, but it requires careful planning and a deep understanding of the real estate market. It’s a multi-step process that begins with identifying a promising property and ends with selling it for a profit.

The fix and flip process starts with purchasing, rehabbing, and upgrading a property before selling it – also known as flipping it – for a profit. The key is to buy low, add value through renovations, and sell high.

Investors typically look for distressed properties that can be purchased below market value. To do this, they scour the market for undervalued properties that have the potential for significant appreciation. Some of these properties are in poor condition; others may need thorough updates to kitchens, bathrooms, flooring, and wall covering because they are badly out of date.

Once a suitable property is acquired, the investor needs to take several steps including budgeting, hiring contractors, obtaining necessary permits, and ensuring that the renovations align with market trends and buyer preferences.

The average time to flip a house can vary widely depending on:

• Extent of Renovations: Properties requiring major renovations will naturally take longer to flip compared to those needing only cosmetic upgrades.
• Market Conditions: The demand for housing and the local market conditions can impact how quickly a flipped property sells. In a hot market with tight inventory, houses may sell faster, while in a slow market, it could take longer to find a buyer.
• Permitting and Approvals: Delays in obtaining permits or approvals for renovations can extend the timeline significantly.
• Financing: Securing financing for the purchase and renovation of the property can also affect the timeline. Cash buyers may have a quicker turnaround compared to those relying on loans because they can close quicker and finish rehab without needing construction draws.

After completing renovations, investors list the property for sale. Using effective marketing strategies and staging properties can help attract more potential buyers and secure a timely sale at a favorable price.

Finding the Right Market

Finding the right market is critical for fix and flip investors. Some investors will look for hot markets in different states, but the quality of the location (not just at the market level, but at the neighborhood level) is most important.

Investors can find plenty of great fix and flip opportunities if they know what to look for. Fix and flip data from ATTOM identified three key trends in the 2024 fix and flip market: flips are being completed faster, profits increased for the 3rd consecutive quarter, and the share of flipped homes remains historically high.

The same data also revealed the top five markets (over 100,000 population) in terms of flips profit margins:

• Akron, OH
• Flint, MI
• Canton, OH
• Augusta, GA
• York, PA

Most real estate investor want to be able to do more deals, but one of the challenges is finding the right properties to flip. Investors can find multiple reliable options they can use when looking for their next property. Wholesalers, auction websites, and the MLS are just a few of the options investors have when it comes to finding potential fix and flip properties.

Strategies and Loan Products for House Flippers

Lima One offers investors a number of options when it comes to financing fix and flip projects. Our product suite includes:

• Fix and flip loans for investors who are buying distressed properties, rehabbing, and selling.
• New Construction loans for builders with shovel-ready lots or teardown projects.
• Bridge loans for interim financing for investment properties where a fast closing is needed and minimal or no rehab is planned.

Flipping houses can be a profitable venture for investors willing to put in the time, effort, and resources required to succeed. Whether you're a seasoned investor or a novice wondering how to flip a house with no experience, Lima One is here to help.

Our diverse product suite is designed to allow us to cater to the individualized needs of our investors, and our experienced lenders will help you find the right financing based on your investment strategies.

Contact us today to discuss your next deal, or if you have a deal in hand, accelerate the process by applying now.