5 Market Trends to Consider Before Getting Started With Flipping Houses
Shows like Fixer Upper and Flip or Flop glue to the TV millions of viewers from all over the world. If you've been inspired by TV to enter the world of real estate, there are some trends you need to know.
Shows like Fixer Upper and Flip or Flop glue to the TV millions of viewers from all over the world.
It's exciting to see an average house turn into a beautiful swan under the hands of skilled professionals.
The thing is that the average viewer wants to see pretty houses, not market research which means that these shows, while entertaining, can't show the complete picture in 1-hour segment.
If you're like many who have been inspired by TV to enter the world of real estate, there are some trends you need to know before you get started flipping houses.
These are trends that already shape or soon will be shaping the real estate industry.
Customer-centric is the theme of today's business.
This means that the desires of patrons are a law more than ever, customers know that and they demand it.
As a result, customization is no longer an extra but a feature that is expected as part of the shopping experience.
The retail industry has already adopted this mindset like sportswear companies which now offer customization on many of their goods.
As for real estate, with Instagram and Pinterest providing astonishing design ideas and DIY hacks, "regular" people realized that they too can have a beautiful home and even do it on a budget.
This means that the trend is for homes to be remodeled and turned into an extension of their owner's personality.
This is good news for house flippers because it means you can keep renovations simple, thereby keeping costs down.
Until recently the minimalism trend was also going strong especially among the younger generations.
It keeps being so though now we are witnessing the birth of bold minimalism-e.g., few items but in bold patterns and colors.
Not only that but when refurbishing your fixer-upper you should keep in mind the mantra of marketing professionals-you are not your target customer.
In other words, you need to find the balance between making the property feel welcoming but beware of your biases.
Everything is "smart" now-phones, cars, appliances; there's even "smart" water.
Homes have also become smart, intelligent even, with automation getting more capable and more affordable,
It is now common for property listings to detail what smart features the owners have implemented at their real estate.
It could be something as simple as a smart thermostat or as fancy as an intelligent renewable-energy climate control system.
Such features will increasingly become the norm, as each new generation gets more ingrained with technology and grows more reliant on it.
Being successful with flipping real estate is about generating profit, and smart home features can potentially increase a property's value.
A Forbes article even reported an increase in the search for homes with garages with charging stations for e-vehicles.
On the other hand, a home with smart features likely means that the owners are taking good care of the property which means a higher property price.
Unless you operate with a sizeable budget, when house flipping you will ideally be looking for a middle-ground project-a property that's seen better days so you can buy it cheap, but not so trashed that you can't make a profit after renovations.
In sum, while smart homes are a lucrative area, they can be a double-edged sword so pick wisely and do the proper house flipping calculations beforehand.
A large part of the modern-day move towards sustainable and eco-conscious living has to do with growing food close to the point-of-purchase.
Urban farming is booming in both its commercial and private variants.
On the commercial scale, hydroponic systems and vertical growing have allowed produce to grow anywhere and reach consumers within hours of harvest.
The other trend-at-home urban farming, is also on the rise.
Smart devices like those from Click & Grow and AeroGarden allow even urban dwellers that know nothing about gardening to grow food at home without the need for sunlight, soil or much manual input.
But while these devices at the moment are small enough to fit on a countertop, they've attracted enough interest for larger options to pop-up.
While they take away most of the environment-related needs of growing food, they do need space-be it horizontal or vertical.
If the trend of at-home urban farming keeps growing, this will create the need for homes with spaces optimized for it.
While you don't need to do anything special at the moment, knowing your clients well and whether they care about growing their food at home, means that you can create a lucrative selling point, provided the property allows for urban gardening.
In sum: at the moment home farming is not so big that it warrants putting "space for urban garden" on your search list but is a trend to keep in mind.
We did mention customization in the first point, but customization and personalization are not the same.
NNGroup makes the following distinction: "Customization gives control to the user and personalization gives control to the site."
In the first point, we talked about how real estate clients are seeking spaces that they can customize to their needs; here we're talking about clients expecting to receive personalized service from you.
People nowadays are free to explore a variety of social, family, and employment lifestyle, so habits are changing and so are home preferences.
In Flip: An Unconventional Guide to Becoming a Real Estate Entrepreneur and Building Your Dream Lifestyle, one of the best books on flipping houses, Nick Ruiz suggests that if you are house flipping, you should start with the buyer and find the seller second.
It might sound counterintuitive, but this is a key moment in providing a personalized experience to your customers.
In fact, its a win-win-win situation for all parties involved.
Buyers get properties tailored to their needs, thereby more likely to buy.
This is good news for sellers, and great news for you because you'll end up making happy both the buyer and seller.
Doing so is pretty hard with the traditional approach of seller->buyer.
Personalizing the experience for your prospects shouldn't be a problem, given that the real estate industry is built on the personal touch with the customer.
Real estate marketplace Zillow is personalizing the experience on its website by offering 3D floor plans and an AI that tailors search and learns based on what visitors are looking for, which brings us to the next trend.
With tech getting so advanced-AI, AR/VR, and smart everything-your competition can serve more customers, do it better, and in a shorter time compared to a decade ago.
While the real estate industry has been kind of slow, compared to other major industries, in adopting emerging tech, the bolder actors are already reaping the benefits.
The online house flipping platform Opendoor became a multi-billion dollar company within several years of its founding.
There are so many opportunities for turning to tech in your house flipping business
- There are a ton of great apps that make it a breeze to sign documents, process payments, and even streamline loan applications.
- AR/VR and 3D visualizations are are great additions as they allow clients to virtually enter properties at any time without having to book a viewing.
- AI is making search very intuitive and has also brought to a whole new level the aforementioned personalization aspect of property trading.
- Modern production technologies like 3D printing mean that fixing up a home will become very affordable, allowing for endless possibilities.
However, keep in mind that while such innovations can be a great help in your property flipping business, they are widely available to your competition as well.
In fact, they are even creating indirect competition for you.
Why buy a house when Airbnb lets you live all over the world and does it for every budget?
Why look for a home close to work when the gig economy and co-working spaces allow you to bring work wherever you are?
Why splurge on renovation when services such as Feather and CasaOne will rent you any furniture you need?
The bottom line is that innovations that benefit you likely benefit your competitors, so it's a good idea to keep tabs on what they are up to.
Flipping real estate can be both a fascinating and very demanding venture.
As great as it is to find a nice property at a great price, fix it up and sell it for a decent profit, this business comes with some potholes.
To avoid them you need to stay ahead of the game and the other players.
One of the many ways to do this is by paying attention to where the real estate and house flipping markets are headed.
Let's sum up what's coming and already came for the real estate industry.
- Customization-with countless possibilities to turn a property into a home, real estate buyers are seeking the freedom to put a personal touch in their living space.
- Smart home-tech is shaping our lives and our homes, but tech-filled properties might come with a price tag that's not suitable for a house flipping project.
- Urban farming-sustainable and eco living have brought farming to people's living rooms. It won't be long before "area for indoor farming" will make it as a listing criteria.
- Personalization-personalizing the experience for your buyers is no longer an extra; it's expected of you.
- Tech-enabled competition-innovations can help you do a better job at a lower cost, but the same goes for your competitors. Keep an eye on them.
What other tips for flipping houses have you come across?