The best houses to flip are rarely the prettiest homes or the hottest listings.
They are often the ugly ducklings that have a good soul but a battered exterior or an interior no longer functional and attractive to today’s buyers.
The best houses to flip are not necessarily the cheapest homes, the ones in the best neighborhoods or needing the most dramatic transformations.
They are not the projects that look the most exciting or are hyped up on social media.
Experienced investors gravitate towards properties that tick these three boxes:
- the numbers make sense
- the rehab risk is controllable
- buyer demand is already proven
In a market where rates are climbing and margins are skinnier, property selection has become more critical than ever.
Here’s how to choose the best houses to flip and how to maximize your return on investment.
What makes a good property to flip?
Great flip opportunities are created through spread and execution – luck is not a factor.
The most successful flippers are usually outstanding risk managers first and foremost and competent designers second.
They buy properties below market value to maximize their return, adding functionality to ensure marketability in an area where there is already strong buyer demand.
In researching potential purchases, the best flippers stick to a tried and tested formula:
- the vendor is motivated to sell
- the rehab is only cosmetic
- there are strong comparable sales in the area
- there are realistic construction timelines
- there is a sufficient margin buffer
Think of them as five dealbreakers.
If just one of them is not green, it’s probably time to look elsewhere.
The type of properties to target
There are several types of properties that the most successful flippers target when looking for new inventory.
Cosmetic Fixers
Many experienced flippers and developers favor cosmetic-heavy projects to ones requiring a full structural overhaul.
That’s because the highest ROI projects are often homes that simply look and feel outdated rather than being fundamentally broken.
In many California neighborhoods, buyers will pay a substantial premium for homes with:
- modern finishes
- open layouts
- energy efficiency
- are ready to move in
The best houses to flip are often ones that are begging for updated kitchens and bathrooms that need new fixtures, new flooring, a coat of paint and appealing landscaping.
Undertaking minor internal redesigns to embrace open plan living is much simpler to manage than major structural changes.
Minor cosmetic changes result in many benefits over bigger projects such as:
- shorter timelines
- fewer permit complications
- lower holding costs
- reduced contractor risk
- more predictable budgets
- easier financing
Older homes
Older homes in strong neighborhoods are among the best houses to flip.
California’s aging housing stock has created many value-add opportunities and renovating these houses is a vital plank in addressing the state’s housing crisis.
Many of these houses were built in the 40 years post World War II.
When seeking older houses, remember location often matters more than the property’s condition.
A dated home in a desirable school district, close to shops and public transport or in a supply-constrained neighborhood, may have a far bigger upside than a heavily distressed property in a weak market.
Look for:
- structurally sound homes
- dated interiors
- deferred cosmetic maintenance
- oversized lots
- under-utilized floor plans
- homes with ADU potential
Buyer demand
The best houses to flip are those that meet buyer demand rather than investor ego.
Start thinking like the market.
Remember the house is not for you but for someone else – you don’t have to desire the house or the neighborhood yourself.
A modest home with an open kitchen, clean finishes and strong curb appeal may outperform a luxury renovation with over-improved features for the neighborhood.
California buyers are typically motivated by:
- ready to move-in homes
- updated kitchens and bathrooms
- energy efficiency
- functional layouts
- a home office space
- opportunity for multigenerational living
- ADU potential
- an outdoor entertaining space
Infill and ADU opportunities
California zoning shifts and affordability pressures are increasing interest in small-scale density renovations.
It means that lot splits, duplex or garage conversions and ADUs all come into play – anything that can produce more accomodation.
Divide and add!
Zoning reforms in 2017 have encouraged ADU growth with permits in California increasing dramatically.
In Los Angeles alone, ADU permits grew from around 100 per year prior to 2017 to more than 5000 by 2021.
Properties with unused land or flexible layouts may create untapped value beyond the primary residence itself.
Avoid heavy structural projects
Large rehabs have a much bigger upside but also carry a far greater risk.
Many new flippers to the game underestimate how quickly holding fees add up.
The cost of interest, taxes, insurance and construction delays can quickly erode margins.
They require significant expertise, greater financial reserves and tighter execution to complete successfully.
Developers who undertake heavy structural projects need to be prepared for the following:
- foundation issues
- extensive permitting
- sewer and utility problems
- engineering complexities
- expensive timeline blowouts
- contractor coordination
- financing pressure
- higher holding costs
Don’t rely on Zillow
The best houses to flip usually never hit Zillow.
Experienced operators source opportunities through their relationships with industry professionals and established connections rather than public listings.
Competitive advantage often comes from sourcing and execution rather than simply finding listings online.
They source new inventory through:
- wholesalers
- direct-to-seller marketing
- probate opportunties
- tired landlords
- distressed housing
- agent relationships
- off-market deals
Get finance and support today
Speed matters when it comes to flipping houses.
Competition for properties in California is fierce and the fast approval of capital is imperative in securing property.
A good deal can quickly morph into a bad one if timelines drift.
That’s why experienced flippers value speed, certainty of execution and flexibility from a trusted capital partner to finance their projects.
That capital partner should also be experienced with bridge lending, rehab financing, draw structures and can guarantee fast closing.
In California, Equidy meets and exceeds all of those criteria.
Equidy has an intimate and personal history with all aspects of property development in California and has done so for well over 40 years.
They will ensure your target properties meet realistic ARV markers with sufficient buyer demand, renovation scope, contingency reserves and exit liquidity to make your project a success.
Their sole focus is to help you maximize the return on your investment without putting yourself at unnecessary financial risk.
And here’s the best part.
Equidy is also a hard money lender that offers fast, reliable funding.
They can finance flippers and developers in as little as 48 hours.
They stand by their core belief that anything is possible and they strive to prove it every single day.
Even in stressful economic conditions, they are determined to reward entrepreneurship and resolve to help their clients crystallize their wealth creation dreams.
Equidy enjoys long and established relationships with serious investors, sellers and real estate professionals while leveraging their reputation and trust, using clear communication to minimize the risk to all parties.
Contact Equidy today to book your free strategy call.
