Flipping Houses Quick Tip: How Should I Adjust For Changing Markets?
Answer: Markets go up and markets go down. And many people feel you need to make major adjustments to your flipping homes business as markets change.
Whether your market is sizzling hot or is very slow, you’re still investing in real estate based off the same formula. There’s a reason why I use those same formulas. They’re there to protect me, to help me manage my risk regardless of market conditions and ensure I’m profitable as often as possible.
I’ve been through both up and down markets, and my experience has taught me that if you’re using the right formulas for flipping houses, your business will most often need only minor (if any) tweaking based on the market.
Now at the time I’m writing this, my own market (Baltimore area) has just come off an extreme “up” wave, but is now cooling off a bit. I may be backing off of the formula just a little bit. So it’s a slight tweak; but it’s nothing major.
When the market was hot, I was reluctant to start paying more for properties like many others did. At one point, I did start paying a little bit more, but it was really very miniscule. I didn’t make major adjustments and start paying 5% more for properties just to be able to have a deal. I may have been willing to pay a percent or two more than what my standard flipping homes formula told me I could pay to pick up a deal.
Otherwise I just stick to my formula.
Now as I said, even though things are cooling a bit now, in recent years the values in my Baltimore market have gone way up. Rentals have also gone way up. I started out in this market where rentals were averaging about $550 to $600 per month. Well that same rental is now probably $1,200 to $1,500 and up.
So you might have to make small adjustments if you’re dealing with that dramatic of a change.
My standard formula for buying a house to fix and flip is:
After Repaired Value (ARV), times 70%, minus estimated repairs = the most I can pay. This is a standard formula many investors use. It’s not original or magical. It just works more often than not.
Now when I’m buying a house to flip wholesale, keep in mind that I will have to back my intended wholesale profit off that number as well. The investor I’m selling to is likely to be using a formula very similar to mine, and he expects and deserves a good deal.
From a real estate flipping point of view, as long as you’re sticking to a good formula, you should be buying low enough to be profitable. The formula allows for adjustments in the market to keep you safe. So if you stick to the formulas that work, those that are proven, those that are time tested, then the fluxing market really shouldn’t affect you all that much.
Blessings,
Steve
Related Tags: real estate investing, flipping real estate, flipping houses, flipping homes, flip this house
Your Article Search Directory : Find in Articles
Recent articles in this category:
- Sbi Best Sip Plans 2010
SBI Mutual funds have introduced many mutual schemes. Each scheme has different limitations. SBI SIP - Icici Sip Plans 2010 - Best Sip Plans
ICICI Prudential offers many schemes. These fund schemes have SIP. What is SIP? SIP's expansion is S - Determining Where To Invest Money
There are several kinds of investments, also you will find numerous factors to find out where to inv - Retirement Plans A Necessity Of Life
A person works whole life to give a decent upbringing to his children and families. But while improv - Stock Market Timing Signals
Follow the PlanThis would seem a statement of common sense, but the fact of stock market timing sign - A Selection Of Financial And Investment Strategy Guidelines For Turning A Profit
Yet, we don't often have the money to leave work right at this moment. We need a constant salary to - Find Out The Profitable Way To Invest In Small Cap Stocks
Everyone wants to find a penny stocks list or other investment strategies that can turn your literal - Portfolio #4 - Watergate
IntroductionThe problem is not that the world is running out of water. No, the problem is that drink - Dulton Group: Information Content Of Dividends
Dulton Group helps you to analyze the information content of dividends, an important factor affectin - Coping With Fear In A Markets
The real fact is that all traders, investors as well as stock market investors, who feel afraid, occ
Most viewed articles in this category:
- Investor Stress: A New Approach
George Muzea is both an investor and a stock market advisor. In any given month, he will be paid $10 - Real Estate Investment Financing
1. Location: Your real estate investment's location is arguably the most important component of your - Canadian Oil Sands - Who Are the Major Players
The Canadian oil sands represent one of the most lucrative investment opportunities to oil and gas i - Why Bulk Preconstruction?
Bulk preconstruction is the latest trend in secure, high profit real estate investing. By buying wit - Investing - It Is Not As Scary As You Think
Many people want to have more money - OK everyone does. However, most people don't know how to go a - How Do I Know Which Programs Are Scams?
Although it is virtually impossible to tell if a HYIP is a scam until the moment when they stop payi - Currency Trading Success - 6 Tips to Increase your Profits
If you want to increase your profit potential and achieve currency trading success then the simple t - The Business Cycle
Investors who want to beat the market should be followers of the business cycle. The business cycle - Pros and Cons of Real Estate
Like any other profession, there are good and bad things about what are available. Each of the thin - The Fixer Upper
Real estate investing has become almost a national pastime. Millions are made every year on the buyi