If you want to make money by fixing and flipping houses, you should know the real estate market in your area. The value of real estate properties in New Hampshire is not the same. If you really want to proceed, you should look for the cheapest property in a good neighborhood. According to some experts, you should follow the 70% rule. It states that your payment should not exceed 70% of a property’s after-repair value less its renovation expenses.
Set realistic expectations when it comes to the amount that you could earn from flipping a property. You should also find properties in popular places that acquire a large amount of real estate traffic. The property won’t be sold if it is not in a sought-after, secure neighborhood with proper facilities and good schools. You should also get advice from an expert before purchasing anything.
Should You Get a Loan or Pay Cash?
There are plenty of stories out there of people who go into the home-flipping business only to discover they have bitten off more than they can chew. To reduce the risk of financial devastation that may come from a poor investment, consider using cash to pay for your investment property. If you pay for an investment home in cash, you won’t have to take the first offer you get on a home. If the house is already paid for, you can wait for a seller’s market.
Let say you purchase the home in Madison for $99,430. You finance the purchase price on the house, plus the $10,000 you planned to spend on renovations. You expect to make a healthy profit.
You apply for a HELOC loan at 5.48%.
All is going well until a late-summer storm damages the roof, and your regular contractor can’t make the renovations on the house as quickly as you were planning.
Weeks stretch into months, and the renovations are not yet complete. In the meantime, you are paying hundreds of dollars a month in interest on the loan.
Then a local company lays off 10,000 employees, and the local market is devastated. You may finally sell the home eight months later, but after paying $15,000 in closing costs and taxes, instead of making a cool $60,000 on your investment, you end up making $4,500. This $4,500 is your earnings over eight months.
If you had paid cash for the home, you could have waited until the market recovered from selling the house. Paying cash gives you more flexibility because you aren’t paying interest and principal on a loan every month.
While you can get a home equity line of credit loan to flip a house, the safest method for flipping homes is paying cash.
Know your finances. Know how the worst-case scenario will affect your financial health.
5 Best Cities in New Hampshire for House Flippers in 2019
So, where should you buy your investment properties?
Madison has many affordable homes on the market, and real estate moves quickly in the area. Check out the North Deering, Rosemont, and Riverton neighborhoods.
You may have a more difficult time finding an affordable piece of investment property in Plainfield, but if you do find one that meets the 70% criteria, it probably won’t be on the market for long.
There are 38 active listings in Milton, New Hampshire today, and with the median price at $143,690, you will surely find some property that can be flipped.
Portsmouth is an expensive community with a median list price of $539,900. You may want to rent out your home in this area since the average rent is $2,680.
Located on the border with Maine, Rye is also within a stone’s throw to Massachusetts. This ideal location makes the average list price a cool $779,000.
Next Steps for New Hampshire House Flippers
Are you ready to take the next step in investment real estate? Sign up for a free account here on NH Listing Service and save your searches. This in turn sets up alerts for you and when you are ready to see a home use the contact form or scheduling tool provided.
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