5 House Flip Rehab Tips for Surviving Long Market TimesPosted by Mom at 8:20pm in Real Estate
I am extremely pleased to report that we closed today on our latest rehab house. Unfortunately, this one sat on the market for nine months. We lowered the price (several times), offered realtor incentives, offered buyer incentives, kept the place immaculate, etc, etc.Anything we had control over, we did. What we could not control, were the five other houses for sale on the same street. This is the way our market is right now.
Even though it sat on the market much longer than we intended, we still walked away with profit. Here are 5 things that helped us through this experience:
We had enough financial reserves set aside to cover holding costs (mortgage payment, insurance, taxes, utilities, etc.) As part of our business strategy, we calculate these costs (and how much to set aside) prior to ever making an offer. It works, because we have not lost money on a deal yet.
- Ask for Feedback and be Willing to Change
After every showing, we followed up with potential buyers and realtors who showed the house. We asked for feedback and learned what they liked and did not like, and then made changes where appropriate. This helps to “take the pulse” on a particular market as well.
- Drop the Price
When we first listed last year, the house was well within the average asking price in that neighborhood and was in great condition. Due to the slow market, we had to drop the price be in line with other comparable houses. I personally dislike doing this…I mean who wants to lower their potential profit? However, it was necessary to sell.
- Keep Positive
After the first 90 days passed and we had no real offers to work with, the house started to feel like a burden. We took that energy, funneled it into constructive activities like advertising and networking, and reminded ourselves that the house would eventually sell.
- Have a Plan B!
It is vital to have alternative plans when rehabbing/house flipping. In our case, we set a drop-dead date of when we would convert the house to a rental if needed. Thankfully, it sold before that date.
On a side note, I had the opportunity to talk with the buyer’s children at closing, and they told me this was their first home. I loved seeing the look of excitement on their faces when I asked if they picked out bedrooms…and listening to them enthusiastically describe the plans they had for “their rooms”.
This is a wonderful benefit of this business, taking a junk house and turning into a home anyone would be proud to live in!