If we’ve learned anything since 2020, we’ve certainly seen that change is inevitable. At a moment’s notice, jobs, society, and the economy can shift, requiring us to adapt our lifestyles, movements, and work in a myriad of ways. As a result, more people than ever are looking for multiple streams of income to make sure their families are able to thrive even in the most uncertain times.
With the explosive growth in the real estate market over the last year-and-a-half, many savvy investors are looking at home-flipping as a lucrative wealth-building option. If you’re considering how to flip homes, here are some key factors to consider.
1. Set goals
Begin by thinking about your personal financial situation and both long and short-term objectives. House flipping, when done well and in a strong market, is a fairly rapid way to build wealth. How much money would you like to earn? Are you looking to make house flipping your main work or just an occasional option when you’d like to earn some extra cash? What financial assets and skills do you presently have available? Meet with your financial advisor and create a plan for when and how much you will invest. Consider how the work will be done. Will you be a construction manager or be more hands-on to complete the work yourself?
2. Learn the neighborhood
West Loop, Chicago, is an up-and-coming neighborhood. This revitalized and repurposed sector of Chicago offers a lively community filled with parks, eateries, music venues, and boutique shopping. West Loop offers urban living at its finest and, as such, attracts many young professionals who need quick access to jobs in the city. Families are drawn to this area for quality schools and the number of attractions within reach. West Loop has outstanding walkability rankings, making it possible for residents to go about their daily routines without the necessity of an automobile.
The demand for West Loop homes for sale remains strong, and the market continues to lean in the seller’s favor. The current median list price for homes hovers just below $380,000 for condominiums and townhomes, in contrast with single-family homes, which typically list at $299,000. Homes are moving from listing to sold in a month and a half, which is more than twice as quickly as they sold this time last year.
All of this is great news for house flippers, who can expect to see a fairly rapid turnaround from profitable ventures.
3. Prepare your budget
Home-flipping can come with a wide range of expenses. Beyond the initial property purchase, repairs and upgrades can range from fairly minor cosmetic work to major structural repairs. Become as informed as possible of your potential costs before beginning work. Hiring a reputable home inspector to fully assess the structure, roof, appliances, electrical components, and more can provide invaluable insight to keep you from expensive surprises. Unexpected extra expenses almost inevitably occur, so make sure there is plenty of cushion in your budget for increasing material costs, unexpected repairs, or hiring a subcontractor for a specific project.
Additional costs will need to be given consideration, depending on the property you purchase. Are there homeowner association fees? Have you taken into account insurance and utility costs for the time that the property belongs to you? Are there outdoor projects, such as adding decks or pergolas, that you are considering to improve the property? If the house does not sell quickly, be sure that you can carry the expenses until it does.
4. Look for the right properties
One of your best resources in finding great properties to flip is a knowledgeable local real estate agent. The team at Hello Chicago knows West Loop homes for sale because this is their neighborhood too. By connecting with them, you’ll gain an excellent networking tool and be able to learn about up-and-coming purchase opportunities and which houses are a great investment.
As you are seeking the perfect house to flip, doing a little neighborhood reconnaissance can go a long way toward selecting a wise investment. Pay attention to these factors:
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Where is the property located? A home in a great neighborhood with access to everyday amenities will be greatly preferred over one tucked in a remote, out-of-the-way spot.
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What is the condition of the surrounding street or condominium complex? Well-kept properties demonstrate a pride of ownership that sells.
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What sorts of homes are in the neighborhood? If you are considering a house with five bedrooms when the rest have two or three, this home may stand out too much to sell well.
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Who are the neighbors? A community full of families with children or retirees is likely to attract more of the same. Is the property you are considering one that will appeal to the demographic of homeowners in the area?
5. Secure financing
Several different approaches can prove successful for acquiring the funds you’ll need for your flip house. While you may automatically think to go to the bank for a construction loan, know that the process can be time-consuming, taking on average 45-90 days for the loan process to be completed. Banks can also be hesitant to provide loans for homes that need a great deal of repair.
Additional options for financing may work just as well- or better- for you. A home equity line of credit allows buyers to borrow against the value of the home they already own. Some prefer utilizing the cash-out refinancing option, which allows a homeowner to replace an existing mortgage with a larger one and pocket the difference for other investments, such as learning how to flip homes.
If you are connected with a strong network of investors, it may be worthwhile to put together a professional presentation and invite them to an event in which you showcase the property, your plans, and your timeline for flipping it. Inviting them to share in the profits by investing now will cut your cost burden and provide you with another strong means of making your investment plan launch well.
Want to learn more?
If you are ready to invest in West Loop real estate and try your hand at house flipping, give Hello Chicago Homes a call today. They will gladly answer all of your questions about the area and the home-buying process and be the strongest ally in your new business venture. Give them a call today at (312) 219-5965.
*Header photo courtesy of Hello Chicago Homes
*Header photo courtesy of Hello Chicago Homes
