Flipping homes can be exciting, but what if you don’t want to flip an ‘average’ home and would rather flip luxury homes?
Is it possible?
It is, but it requires a different approach. Chances are you won’t find luxury homes for dirt cheap prices that after you fix them up make you an amazing profit. Luxury homes come at a higher price, which means lower profits if you aren’t careful.
What You Need To Know About Flipping Luxury Homes
- Location is the most important factor
The home itself plays a role, obviously. But with luxury homes, location is even more important. Think about it – you wouldn’t want a luxury home in the middle of ‘ordinary homes’ right? If you want to earn a decent profit, you need to find luxury homes in a desirable area.
- The renovations will cost more
Remember a big part of flipping a home is renovating it to make it worth more. Since you’re already dealing with an expensive home, you’ll need expensive renovations to make it worth even more. If you can’t afford the quality renovations it needs, you won’t make the intended profits.
- You’ll need a specific type of client
Not everyone buys luxury homes. You’ll be dealing with a different type of clientele than you would if you were selling an ‘average home.’ Make sure you know the area and get to know the community so you market to the right crowd and make what you want on the home.
How To Find Deals To Flip Luxury Homes
Finding luxury homes to flip is different than looking for average homes. You want a deal more than ever when you’re looking at luxury homes. Here are a few simple ways to get a great deal:
- Look at areas that haven’t fully recovered
The housing crisis was a long time ago but many areas haven’t fully recovered. If there are areas like that near you, focus your search there. You’ll have better luck finding a home for a steal in an area where the homes aren’t worth as much as they could be just yet.
- Look for motivated sellers
Some sellers need to move fast. They are more interested in moving than getting top dollar for their home. In other words, they may welcome your lower bid if you have the financing ready to go and can close in a short amount of time, which is possible when you have a hard money loan.
- Focus on rural areas
Look in the less densely populated areas for luxury homes. You’ll find more opportunities at lower prices because the demand is lower. Just make sure you know the market for homes in that area. If you have a motivated real estate agent that has a market of buyers looking for luxury homes in rural areas, go for it.
The Benefits Of Flipping Luxury Homes
It might seem like more of a headache than anything to flip luxury homes, but there are many benefits including:
- Luxury homes are appealing to the eyes. They are easier to flip and sell because they photograph so well and catch the attention of buyers. Of course, you need the attention of the right buyers (the ones who can afford it), but they are often so unique that they are easier to sell.
- Most luxury homes are well maintained, even if they were a foreclosure. They usually need less major work, which means fewer expenses for you and a faster flip.
- There’s much less competition. When you flip ‘ordinary homes’ there is a large amount of competition among other real estate investors. It takes a special type of real estate investor to flip luxury homes, though. You’ll have a bigger piece of the market than you would with ordinary homes.
- There are more financing options for jumbo loans. Buyers today have an easier time getting the necessary financing to buy a home that’s worth a lot more.
Flip Luxury Homes For Great Profits
If you want something different, consider flipping luxury homes. You’ll likely have a smaller inventory of homes in your portfolio because of the higher price, but the return is immense. To gain a better understanding of the potential ROI, this hard money calculator can help you quickly estimate the costs, net profit and potential return on investment.
If you want to deal with different clientele, have more fun with renovations and decorating, and want higher profits, you’ll find them with luxury homes. Try flipping a luxury home and see how it goes for you. If nothing else, it’s a great way to diversify your real estate portfolio.