When people think of flipping houses, they usually think about foreclosures and short sales. They also have a stereotype in their heads about the kinds of people who get foreclosed on and the kinds of properties they own. As a result, they completely miss an amazing market for flip houses that can really make their real estate investing dreams come true.
I’m talking about high-end flips. Whether they’re foreclosures, short sales, trust sales, or they just need a lot of work and the owners need to walk away from them, these houses have a lot of advantages over lower-end properties.
Christina and I love finding luxury flip houses and flips in really nice neighborhoods. In fact, you’ll notice as you watch our show that the houses we’ve been investing in have been getting nicer and nicer over the seasons. That’s because, as we’ve built our business, we’ve had more liquid capital to work with, and we’ve been able to take advantage of these amazing deals and get really great profits. So, why should you keep your eye on high-end flips?
They Get a Lot of Good Press
If you can find and rehab a beautiful, luxury house or condo, you can really take advantage of the eye-candy aspect of this kind of property. If you don’t get any offers the day of your open house, you’re sure to get them when you get a write-up in a real estate or architecture magazine or website. It’s a lot easier to get that kind of exposure when you have something that those publications want to show off.
Welcome to the Neighborhood
With high-end properties, you’ll find high-end neighborhoods and communities. Your buyers will drive through the neighborhood on the way to see your property, and they’ll think, “I want to live here,” instead of, “How many locks do I need on my front door?” I always use every tool available to me to sell our flip houses, and it’s great when the neighborhood helps sell the property.
The Rehabs Take Less Work
Luxury and high-end properties are built using quality materials, and their owners usually keep them well maintained until they cannot afford to anymore. Beyond this, if you find a real estate-owned (REO) luxury property, it’s likely had more protection and security against vandalism and theft than other properties. That means you’re looking at less work when you rehab it and a better return on your investment.
Less Chance of Over-Building
When you rehab a house, you always have to think about building to the property values in the neighborhood. If you go overboard with your rehab, you won’t be able to sell your house at the price you need to make a good profit because people buy houses that fit into their neighborhoods. No one wants to purchase a house that costs $200,000 more than any other property on the block.
With luxury properties and neighborhoods, though, you’re looking at houses that have been built to be the very best. You won’t have to worry about over-rehabbing because everyone in the neighborhood has a beautifully updated house with a high market value.
Finally, you can make a lot more money on luxury flip house than you can flipping houses that are lower in the price range. It’s not uncommon to sink $100,000 into a $500,000 flip. However, when you turn around and sell it for $700,000, even with closing costs, you can make $60,000-70,000. For a lot of people, that’s more than a year’s wages. In real estate investing, that’s a couple of months’ work with the right luxury flip!