Finding the Right Neighborhoods
Experts agree that targeting several key neighborhood criteria can lead to more successful fix-and-flip deals. One of them is focusing on the right neighborhoods given your own personal location and intentions.
Here are several targeting items to consider:
- Proximity to your work and home - the closer the better.
- Selling prices - are they in a range that you can capitalize on?
- Sales activity - no sales for others could mean no sales for you.
- School district - unless all your buyers don't have kids, pay attention here.
- Asking prices - when you are buying, the lower the better.
- Style of home - out of date can mean out of market.
- Construction materials - the better the inputs, the better the outputs.
- Square footage - it's the ratio that matters relative to the neighborhood.
- Number of bedrooms and bathrooms - know the norm for the neighborhood and be careful not to fall short.
- Presence of basement - if people expect one, have one.
In addition, here are some additional key areas (from MLS information) to fold into your targeting calculations:
- Price per square foot - be in the fat part of the bell curve, not on the edges.
- Property taxes - it's relative, but understand what people are getting.
- Year built - older homes typically offer better flipping potential, but not with asbestos.
- Days on the market and days to sell - the lower the better.
- Features and Amenities - the more the merrier.
- Neighborhood school ratings - bad ratings can dampen your return.
Finally, everyone is concerned about safety and neighborhood appeal factors in their targeting efforts, including:
- Established reputation - a bad reputation normally leads to a bad ROI.
- Clean and well kept yards - why work hard if the neighbors around you won't?
- Low crime rate and good starter homes - if people don't feel safe, your investment won't feel safe.
- Close to schools, shopping, mass transportation, business centers, and parks and recreation. Of course!
Net-net, if you are looking at fix-and-flip properties with these considerations in mind - your chances of success have just gone up.
