THE ISAACS TEAM
FIX & FLIP
The Isaacs Team | Compass
Property improvement can really pay off in the District.
Office
NW DC
20005
CONTACT
WhatsApp Chat
What does ‘Fix And Flip’ Mean?
What does the term mean?
“Fix and flip” is the most common form of house flipping (the other is purchase in a rapidly inflating sub-market, hold, then resell). An investor buys a property requiring updates and repairs, complete renovation, or remodeling, makes the necessary adjustments, and resells at a profit, usually within 30 days to 6 months, depending on the extent of work.
Success depends on the market for the renovated home and the price the investor pays for the unrenovated property. The 70% rule states that the investor should pay at most 70% of ARV (after-repair value) for a home, less the cost of improvements. Keep in mind that some improvements are more valuable on resale than others–so investors need to know where their cash will go before making these calculations.
Why Fix & Flip?
Flipping houses can be very profitable if you know what you’re doing.
If you’ve never flipped successfully, think about starting off with a partner experienced in flipping.
While you don’t need to be a contractor or real estate agent to flip houses, your chances or making (and not losing) money are much greater if you:
- Have access to reliable, capable and licensed contractors
- Understand renovation: the process, costs and pitfalls
- Understand current market trends and values for interior and exterior design elements
- Understand neighborhood values and the market for the type and location of the home you plan to flip
Work with a real estate agent experienced with investing. They’ll help you identify property values and resale potential, and connect you with pros to bid improvement costs, uncover needed repairs and improvements and walk you through the buying and reselling processes.
Financing Keys
Fix-and-flip loans often take a significantly shorter time to get approved than other real estate loans, so your offers can close quickly.
Fix-and-flip loans can also offer more flexible loan terms with fewer regulatory inclusions.
There are tax breaks to be had if you hold your Fix & Flip in an LLC. According to SmartAsset.com, they include:
- Home improvement costs on sold properties
- Interest on real estate loans
- Property taxes on investment properties
- Building permit costs
- Real estate commissions
- Travel expenses
- Office supplies
- All off-site office expenses, like rent, internet, utilities, etc.
- Legal and accounting fees
What type of properties can I Fix & Flip in DC?
CONDOS | CO-OPS
Condos and cooperatives might seem a good entree into fixing and flipping, but consider:
- Shared plumbing, electrical and HVAC components can limit ability to improve and increase time needed to improve
- Association restrictions and architectural review boards can add time, expense and restrictions to your improvement plans
- The profit on condos is generally much lower than on other home types
SINGLE FAMILY
Attached or detached single family homes are excellent candidates for fix & flip. The key to higher profits on SFH is buying properties without structural issues, at the right price.
Research historic preservation in neighborhoods you’re considering and understand the restrictions that apply
Have thorough inspections performed pre-purchase whenever possible, by:
- General home inspector
- Structural Engineer
- Roof Inspector
Research zoning restrictions, flood zones, DC lead pipe map, and crime maps. These can impact your project and resale value.
MULTIFAMILY
Multifamily dwellings can be great candidates for fix & flips, depending on whether or not the units are tenanted. In the District, tenant laws can make it difficult to keep to a renovation schedule that brings a project in on budget.
Remember that your renovation costs will multiply for many fixtures and finishes. Factor that into your cost assessment.
Have thorough inspections performed pre-purchase whenever possible, by:
- General home inspector
- Structural Engineer
- Roof Inspector
Take advantage of vacancies by making needed plumbing and electrical repairs and replacements when it is easy to access components through floors and ceilings.
Consider a sewer scoping inspection to determine the longevity of your sewer line. Make needed repairs/replacements before tackling exterior landscaping.
Disclaimer
Our Investment content is posted for informational purposes only and should not be construed as investment, financial, legal, tax, or other specialized advice. We not financial advisors. Seek advice from professional legal, financial, taxation, or other experts before making investment decisions.
Your Washington DC Real Estate Investment Compass
House Hack
Generate income from your personal residence. Live in one portion and rent the rest, either short-term or long-term. Ideally, tenants cover the mortgage, owner builds equity.
Fits Classifications:
- One Family Rental
- Shared One Family
- 2 Family Rental
- 3+ Family Rental
Fix & Flip
Purchase below-market priced property requiring updates, renovation or remodeling. Do the work and resell at market rate.
Fits Classifications:
- All types
Buy & Hold
Buy and hold real estate is a long-term investment strategy primarily focused on value appreciation. The investor purchases a property and rents it for an extended period of time, often 5-10 years.
Fits Classification:
- All types
Multifamily
Multifamily properties such as apartment buildings, 2-4 unit boutique rental properties, or duplexes offer multiple spaces for rent and thereby boost net operating income and cash flow. These properties can also realize outstanding equity build, if properly maintained and managed.
Fits Classification:
- Multifamily
DC REAL ESTATE INVESTMENT
Start With The Basics
Whether you’re investing in DC real estatae as a side hustle or full-time business, understanding the local real estate market and fundamentals is key.
How We Help
- Guidance and education
- Off-market opportunities
- Skill, expertise and experience
Assembling A Team
Having a team of professionals in place will ease acquisition and managment of your investment portfolio.
Your Realtor, lenders, property manager, contractors and vendors functioning as a team can identify opportunities, speed transitions, address issues, and increase profitability.
Ready to make a new investment in yourself?
