Reasons No One is Buying Your Fix and Flip Property
In politics it is all about the economy. In property and especially buy to lets and HMOS it is about yield & management. Many do not really consider management however management is paramount. Maybe even simpler than yield …Next word is Price!
Regarding price we all have our favorite stores…like TK Max for instance. Price is the issue. It’s like a treasure hunt every time I visit the store. Rack after rack, I sift through all of the dreadful colors, styles and patterns. As I leave, often shaking my head, I’m intrigued by all the merchandise that no one seems to be buying. I mean is someone really going to buy that XXXL green t-shirt with the scarecrow embroidered on the back?
The Fix and Flipper’s Customer
Make no mistake…There are 2 distinct customers…
If you’re going to fix and flip houses, you have customers. And to be successful, you must give the customer what they want.
The fix and flip investor’s customer is either the homebuyer or the arm chair investor who is sitting in Hong Kong or Dubai or even London.
And guess what?
Homebuyers & investors are picky. Very picky. They want it all. Location, yield ( if they are investors) and quiet regarding management.
Homebuyers want to move in with a tooth brush.
Whether you’ve fixed and flipped 100 houses, or have yet to purchase your first deal, it’s important to remember what turns your customers off.
I came up with a list of five reasons a homebuyer won’t purchase your house:
- You chose the wrong finishes
- You didn’t pay attention to detail
- You cut corners and did cheap work
- You’re priced too high
- Location, location, location
Dont be Foolish on your Property Flip
Don’t Cut Corners
Now, more than ever, the homebuyer or the survyeor can spot a bad rehab. Don’t think for a second you can fool anyone.
If your house needs anything, and I mean anything, replaced, you better replace it before you list it for sale. And if you’re not 100% sure something needs to be replaced, then it probably does.
I can’t tell you how many half-assed fix and flip deals I’ve stumbled across over the years. I’ve seen investors add some eye candy to the property (new cabinets, paint, carpet), but not replace 50-year old windows, or 20 year-old HVAC systems.
You’re Priced to High
Many investors (including me) have a very high opinion of their properties. They believe their house should sell for more than any other because it’s like brand new.
While your home may be the nicest on the street, it doesn’t mean it’s worth 10-30% more than the next nicest house in the neighborhood. However when you have HMOs the investors need to understand you put anywhere from 25k to 50k to increase the rents. There are many unsophisticated investors who expect to get the same brick and mortar value price at purchase yet they want the much higher rents of a HMO.
Remember, today’s homebuyer and property investors is smarter than ever. They have tools and resources available to them to determine a fair market price for your deal. There is a magic tool
GOOGLE!
On another thought….
Location, Location, Location
My Dad had a saying…
You can’t polish a frog
No matter how much bling you apply to a home, if the location sucks you’ll never sell it (for a profitable price).
I’ve seen houses on busy streets sell for 20-30% below what properties inside the subdivision go for.
I hope these bits our long experience helps out!
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