Anyone who’s interested in real estate investment has probably heard about “flipping” houses. In a nutshell, flipping involves buying a house below market value, renovating it, and selling it for a profit.
But house flipping doesn’t just happen in the mid-cost segment. According to data from Realtor.com, about 2.6% of homes in the U.S. valued over $1 million dollars were flipped. Data also shows that flipping luxury real estate is on the rise.
If you’re interested in flipping Orange County luxury homes, here’s why it’s a great investment strategy.
Lower Barrier to Entry
Building a house is a significant investment. Building a luxury home is even more so. If you wish to invest in luxury Orange County real estate but don’t have the capital to build it from the ground up, renovating and selling an existing home is a viable alternative.
It’s More Accessible than You Think
Of course, purchasing a luxury home for flipping entails a sizable financial outlay. If you know where to look, however, you can score a fantastic property at a great price. For instance, you should consider purchasing high-end homes through short sales, foreclosures, and trust sales. Such properties are often sold with a significant markdown, allowing you to acquire prime real estate you otherwise couldn’t afford.
You’ve Got a Good Foundation
Many house flippers purchase a seemingly viable property, only to discover defects that make it far too expensive to renovate. Fortunately, this is far less likely to happen with luxury homes, as their former owners have the means to properly maintain them. Flipping upscale homes usually entails updating the aesthetic, adding more modern features, or converting certain rooms, rather than addressing fundamental issues with the property.
It’s in a Good Neighborhood
In real estate, it’s all about the location. That’s why even a great home in an undesirable neighborhood will have a tough time selling. But luxury homes are often located in luxury gated communities. Hence, there is already inherent buyer interest in properties there. When you don’t have to worry about the desirability of a property’s location, you can focus more on flipping it well.
Easier to Market
With a renovated home and a desirable location, you’ll have an easy job of marketing your property. Even better, luxury houses sometimes even get free marketing when they are featured by magazines and other media outlets. Furthermore, luxury homes sales are one of the strongest segments in the real estate market; in short, you are marketing to buyers who are willing and able to purchase high-end homes.
Less Competition
While the number of house flippers continues to rise, most are looking to acquire mid-to-low cost properties. If you were to dabble in flipping houses at this price range, you’ll be competing with everyone else. Fortunately, there is much less competition in the high-end real estate market, so your chances of actually getting to purchase a property is higher.
Easier to Buy
With mortgage rates nearing historic lows, people looking to buy a luxury house are finding it easier than ever to secure financing. This creates a bigger pool of potential buyers, and a higher likelihood that your newly flipped house will sell sooner rather than later.
Before You Invest
Flipping luxury houses can spell great returns, but any business venture or investment must be carefully weighed. If you’re new to flipping, take heed of these tips:
Smaller is Better
The best way to learn the ins and outs of luxury house flipping is to start with smaller properties. For instance, instead of renovating a 10,000-square-foot mansion, a smarter and safer choice would be to flip a high-end condo unit first. As your confidence and network of trusted contractors grows, you can begin tackling more ambitious projects.
Study the Local Luxury Market
Remember that you are not renovating this house for yourself, but for a potential buyer. Before commencing a house flip, take a good look at the property market in the locale. What kind of luxury properties are real estate buyers looking for? Which home features are most in demand? By doing your research, you can undertake renovations that are better geared towards helping your property sell.
Have a Good Broker
Successfully flipping a house is just half the equation. The property now needs to be listed and marketed. It’s best to partner with a real estate agent that specializes in the high-end segment. This will ensure that your agent will have the connections, the strategy, and the know-how to get your luxury house sold as quickly as possible.
If you’re looking for a trusted realtor that has extensive experience selling deluxe properties, whether luxury beachfront homes or luxury horse ranches for sale, get in touch with the Cordova Real Estate Group. Just call us at 949.207.4040 or send an email to mc(at)southorangecountyliving(dotted)com.