Are you wanting to get in on the house flipping craze in Santa Cruz? It’s been reported that about 8% of homes sold nationwide in 2017 were flips – that means hundreds of thousands of people are cashing in on this lucrative corner of the real estate market. Here are the top tips for Santa Cruz house flippers in today’s real estate market.
#1: Buy at the right price
Most flippers get into trouble by simply paying too much for their flip projects. In most cases, a flipper in Santa Cruz will need to purchase for no more than 85% of current as-is market value – where, realistically, they could turn around and sell the property the day after they buy it for 15% more than they paid for it. You need that cushion because when you as the flipper re-sell the property, you’ll have to pay a commission, other closing costs, property taxes, interest payments, insurance, etc. – and you need a cushion too in case there’s a fluctuation in the market or you over-estimated as-is market value.
#2: Leverage owner financing
Many owners who sell to flippers don’t need all their cash right away; they may be OK with receiving 20-30% of the sale price upon closing and carrying back a note for the balance for 3-6 months, often interest-free. This will lower the flipper’s cash-out-of-pocket and carrying costs considerably.
#3: Partner with the Seller
Negotiate a very low price with the seller, but offer to give them a piece of the pie upon resale, effectively making them a silent partner in your Santa Cruz flip venture. The seller will be much more likely to accept a low sale price knowing that they’ll get cut in on the profits of the sale.
#4: Get testimonials from past sellers
Flipping houses isn’t all about making money – it’s also about helping people out of sticky situations, where a motivated seller finds the right investor to get them out of an unwanted property. Get testimonials from these Santa Cruz sellers and put them on public sites like Yelp or your own web site. Video testimonials are awesome if you can get them too. Getting sellers to trust you is key to getting your offer accepted.