Although its popularity has a lot to do with the ups and downs of the housing market, flipping houses has become a popular endeavor for some. There are those who even make a living from flipping houses. And while most do it for the money that they’re able to make, there is a joy that comes from taking a property that was rundown and unloved and turning it into a thing of beauty with beautiful gates as fences or building a stunning patio.
Chicago is a great city for house-flipping because it’s a city of neighborhoods. When specific neighborhoods get hot and families start to move in, this can present great opportunities for real estate investing, which is basically what flipping is. If you’re thinking of flipping houses in the Chicago area, here are some things you’ll want to be aware of.
Look In the Right Neighborhood
When picking a house to flip, you don’t simply want to roll into any neighborhood and buy an old house. You’ll want to make sure that there’s something favorable about the neighborhood. Some questions you might want to ask are:
- Is the neighborhood desirable for families?
- Is the neighborhood growing?
- What are the schools like in the area?
- Is the neighborhood safe?
- Would I want to live in this neighborhood?
The bottom line is that if the neighborhood you select is horrible, chances are there won’t be much interest in the house no matter how nice you’re able to fix it up.
Pick the Right House
Once you have selected the neighborhood from which to buy your house, you may be wondering how you’ll decide on what house to buy. A lot will have to do with the selection you’re presented with. Another factor will have to do with your budget for purchase and repairs. Of course, you’ll want to consider the state of the house itself. What’s the condition of the structure? What kind of work will need to be done? Are you able to make the house special in some way that’s attractive to potential buyers?
You’ll also want to make sure that the house you buy doesn’t have quirks or weird oddities that could only be fixed at great expense. Although buyers want their homes to be special, they usually don’t want them to be strange.
Consider Working with a Real Estate Agent
Although you don’t need a real estate license to flip homes, you may want to seek the advice of a real estate agent to help guide you in the process. For example, a real estate agent can run comps to help decide not only the right purchase price but an estimated market value once a renovated property is ready to be sold.
When it comes down to it, a real estate agent likely will have knowledge that you do not, like who are the best Chicago painting contractors and inspectors. You may not know certain aspects about the city, like where the flood zones are, but a realtor will.
Set a Timeline
Flipping houses in Chicago takes an average of 193 days, but it could take a lot longer if you don’t have all your ducks in a row ahead of time. This means having a team of contractors and inspectors ready to go. If you choose not to work with a real estate agent, you’ll want to make sure you do your research when it comes to selecting people to do renovations.
Also, if you’re using a conventional investor loan, make sure to account for the minimum closing period at purchase. On the other hand, cash buyers who waive contingencies can close and get started on renovations much sooner. Cash buyers can also wait out a slow market because they don’t have interest payments piling up.
Flipping houses in the Chicago area can be profitable, but you’ll have to know what you’re getting into if you want to be successful at it. Looking in the right neighborhood, picking the right house, and working with a real estate agent who knows the area are important things to consider when house-flipping, which can be a tricky business. Still, there are those who find that flipping houses can be a rewarding endeavor.