Have you ever found yourself watching home flipping or remodeling to sell shows and think, “I could totally do this?” We sure have! House flipping, while having the potential for considerable financial upside, has become more challenging in recent years due to fluctuating market conditions, increased cost of material/labor, and challenges with securing available contractors that can meet your project deadlines.
Success in the San Pedro and Rancho Palos Verdes real estate markets requires a level of diligence, local knowledge, and financial planning that goes far beyond a weekend DIY project. In our coastal region where median home prices can range from over $1 million in San Pedro to nearly $2 million in Rancho Palos Verdes, flipping isn’t just a minor home renovation project—it’s the management of a high-value, high-risk financial asset.
This form of real estate investing can come with a serious monetary and time commitment. Whether you have had dreams of doing this with your own home, a property you have inherited, or an investment home that you are considering buying to flip, here are some recommended steps to success, especially in our local real estate market.
Research: Knowing the local real estate market is #1 on the list! Being able to gather and analyze data on housing trends, recent sales activity, and pricing is where it begins. Is the home in a “desirable neighborhood” and does it have upside potential? Can you acquire the home at an attractive price that will give you enough “room” to make the necessary improvements and resell the property at a reasonable profit? In our evolving market, proper pricing is imperative as the days of just listing a home at any price and receiving multiple offers are somewhat behind us as we have transitioned into a more balanced market between seller and buyer over the last several years.
Financial Planning: Now that you have found a home, let’s talk numbers! Securing financing, understanding renovation costs and timelines, and creating a REALISTIC budget is huge! We would even recommend giving yourself a pad, as there always seems to be unanticipated costs and repairs that will arise. There are also holding costs that come along with owning a property that need to be considered, including paying a monthly mortgage, utilities, property taxes, landscaping, etc.
Efficient Renovations: Doing a home inspection before buying a home is HIGHLY recommended. Once this is complete and you are ready to close escrow, focus on improvements that offer the best return on investment, which is what we tend to see done most often: painting, flooring, lighting, finishes, kitchen and bathroom improvements, and landscaping. We also recommend that you hire reputable, licensed contractors for any construction projects.
It’s all about completing your project within budget, meeting your renovation timelines, and selling quickly. This will minimize holding costs and hopefully allow you to capitalize on the market trends with a profitable home sale in our beautiful coastal region
Mike Harper and Peter Hazdovac are both licensed Realtors® and co-owners of HH Coastal Real Estate, an independent local brokerage. For more info, visit www.hhcoastal.com.
