Recently Funded Fix and Flip Loan in San Diego County
Check out 👀 this efficient and profitable fix and flip in San Diego County! If you want to make a business out renovating and selling homes then you need to follow some tried and true formulas. Particularly when dealing with entry level homes, you should study and learn from more experienced investors to learn best practices. This home was purchased March of 2024 for $600k, and the property was on the market and ready for sale in less than 90 days for a price of $800k. Lantzman Lending made a loan of $485k on the property and closed in 9 days.
We gathered up some tips from local real estate flippers and loyal Lantzman Lending clients. Some of the tips are common advice, while others might be nuggets of wisdom to help improve flipping business:
🏠Staging – inventory is starting to increase in some markets. We have gone from less than 1 month of inventory in most markets in 2023, to over 3 months in a lot of markets in 2024. You need to set your listing apart from the others to get the online clicks and the in person visits. Finding a reasonably priced stager that works with investors should be a vital staple of your business.
📸 Professional Photos & Videos 📸 👨💼- Great photos can make your listing standout, and hiring a professional is a must. You should be able to get quality photos for your listing for under $250, and the research has shown that 20 to 25 photos is the optimal number. If you have it in your budget a virtual walkthrough and marketing video can also be a valuable tool in helping to sell you property and gather visitors.
🔑 Stay within your budget Sometimes the hardest part of flipping a property is making the right choices on what upgrades to make and when to say enough is enough on the customization of finishes. Many new investors spend too much money on their renovation when it is not going to return any more money on their investment. This is particularly important in entry level neighborhoods where buyers are sometimes struggling just to get into the market. Interest rates have risen immensely, and affordability is at an all time low.
💰 Every Market has a Ceiling 💰 We talk to a lot of new investors, and there is a common mistake that a lot of new investors make. They believe (or hope) that a cost per square foot of a smaller comparable property will carry up to larger properties in the same neighborhood. However, if there is no data to suggest that a buyer is willing to pay a higher price to live in that neighborhood, you may see the cost per square foot start to compress as it nears the ceiling for that neighborhood. In other words, every neighborhood has a price ceiling, and it’s important to be aware of where the top of that market is at. Buyers tend to only be willing to pay so much in a particular neighborhood before moving on to a different community they think of as superior.
💻 Be a Market Expert 💻 In addition to looking at the estimated resale value of the property, there are other nuances of each market that you should be paying attention to:
1. Quality of the Schools in the area – areas with higher rated schools tend to retain their value better if prices start to soften. Also, a helpful tip when reviewing schools, if you see elementary and middle schools that are higher rated than the local high school then this may be a sign of a neighborhood that is on the upswing.
2. Seasonal Market Adjustments – if you buy a property in summer, be prepared to sell in the winter when seasonal adjustments could affect your resale value. These adjustment can vary by year and location, but in our 35 years of experience, you should expect a seasonal adjustment and price it into your analysis. In a tight flipping market where profit margin can be slim, a small 5% adjustment in the median home price can wipe out your entire profit. In 2023, home prices in CA dropped by 8% from August 2023 to Jan 2024!
3. Market Momentum – Besides the current home values, you should pay close attention to the direction of the recent trends in the local market. Neighborhoods within the same city or county can be moving in opposite directions at the same time. In the business of flipping, you have a relatively short window to sell, so recent trends become vitally important in projecting profits.
For Example, California over the last 3 months has had the following median home values – May $908k, June $900k, and July $886k, which is downward trend 1-2% per month.
However, at the same time Los Angeles County has reported the following median home prices May $811k, June $889k, July $909k which is a monthly increase of around 4% per month.
To take this example even further, the zip code of 90014 near downtown Los Angeles has reported the median prices of $528k in May, $526k in June, and $529k in July. This is basically a flat trend moving up and down by less than 1% per month.
Flipping homes can be an exciting and profitable venture, but success hinges on staying informed, sticking to a budget, and mastering the details of your market. Whether it’s finding the right stager, using high-quality photos, or understanding the local price ceiling, every decision you make impacts your bottom line. With real estate trends constantly shifting, it’s crucial to have a trusted lending partner like Lantzman Lending to help you navigate the process and close deals quickly. Ready to flip your next property? Contact us today and let’s turn your investment into profit!
