Investing in real estate is one of the smartest money moves one can make. Flipping houses is a fun and exciting way to do just that. As the population rises, so does the demand for housing. The more popular an area is, the more people want to move there.
The opportunities are endless.
Today, we’ll be covering everything you need to know about flipping houses in New Jersey and offering the 7 best tips to flip successfully!
Photo by Blake Wheeler on Unsplash
Do Your Market Research
Before diving into the housing market, we strongly recommend you do your research. Educate yourself on housing trends, licensing requirements, neighborhood attractions, and average household incomes. Local realtor networks are a fantastic place to start since they usually have a ton of important resources on hand.
Next, we recommend checking out some live listings and recently sold homes on reputable sites like Zillow. This will give you a good idea of which price ranges are appropriate for the neighborhoods you’re considering.
The median sale price of all property types in New Jersey in August 2023 was $514,000, a 10.5% rise from the previous year. During the same time period, the number of homes sold decreased by 21.1%, while the number of homes for sale fell by 31.0%.
Camden, Westfield, Bridgewater, Freehold, Woodbridge, Summit, Hillsborough, Princeton, Colonia, and Paterson are the top ten fastest-expanding metros in New Jersey so these could be great areas to explore.
Lastly, and probably most importantly, you’ll need to familiarize yourself with New Jersey laws and licensing requirements for investors. There might also be laws specific to realtor investors. While you don’t need a license to flip houses, it could be a good idea to get one anyway. Being licensed lets you access a variety of resources that’ll give you a leg up in the housing market.
While there are no explicit rules in New Jersey for house flipping, you’ll need to get a Certificate of Occupancy before selling the property. You’ll also need to follow the New Jersey Consumer Fraud Act and the Truth in Consumer Contract, Warranty, and Notice Act. These acts require you to offer truthful information to potential purchasers regarding the property and its condition.
Create a Solid Budget
Flipping houses can make you a ton of money but as the old saying goes, you’ve got to spend money to make money. On average, fixing up a house can cost between $17,900 to $78,560. That excludes the cost of purchasing the property and the taxes and insurance costs that go along with it.
That’s why it’s important to develop a solid budget and stick to it. Your budget should also include contingency funds for any unexpected expenses. We recommend following the home flippers 70% rule. Basically, you should only pay 70% of the “After Repair Value” of the home, minus the rehab costs.
The calculation is: Purchase Price = After Repair Value x 0.7 – Rehab Costs
Build a Reliable Team
Teamwork makes the dream work! Having a reliable team at your side is essential to success. There are a few professionals you need. The first is having a fantastic realtor. A realtor will help you choose properties, navigate the housing market and get the best deals when closing on properties. Here are a few ways you can use to find a realtor that suits your needs:
- Request recommendations from buyers and sellers you know and trust.
- Ask friends and family members whether they were happy with any real estate professionals they have worked with in the past few years.
- Interview short-listed Realtors and convey your requirements.
If you’re already fairly familiar with the housing market you might not need a realtor.
The next person is the contractor. Having a reliable contractor on hand is essential! After all, they’ll be the ones ensuring that your renovations and repairs are done well and on time. We recommend you:
- Check out online reviews on sites like Houzz, Angie’s List, and HomeAdvisor.
- Look for licensed and insured contractors. We recommend checking the website of the New Jersey Division of Consumer Affairs.
Lastly, we recommend you invest in a professional photographer and stager. A stager is great for maximizing your property’s appeal by properly decorating the space and the photographer will be taking professional pictures for online marketing. We recommend checking out local real estate photographers in New Jersey who know what buyers in the area are looking for.
When choosing a photographer, check out the photographer’s website to see whether their aesthetic matches what you’re going for. You could also check out online reviews and ask friends and family for recommendations.
Find the Right Property
How much you profit from a flip heavily depends on the neighborhood you choose, and of course, the actual house. Houses in undesirable neighborhoods generally won’t sell as well as those in desirable neighborhoods.
We also recommend that you carefully assess the conditions of the properties you’re considering and figure out the repair costs accurately. Having a good contractor to help with this could save you a ton of money in the long run.
Renovate Wisely
The cost of renovations can easily spiral out of control if you aren’t careful. We recommend prioritizing renovations that will add value to the cost of the home. This could be anything that elevates the aesthetic appeal of the house or adds new features like a pool or heated flooring.
We recommend forgoing unnecessary renovations like redoing the flooring or rewiring the home. However, this will depend on the condition of the house.
If you’re planning on making large changes or additions to the property like adding a gorgeous porch, be sure to pull the correct permits. This includes permits for plumbing, HVAC jobs, and electrical.
Remember, the house doesn’t have to be state-of-the-art. Instead, figure out what would be most appealing and work within your budget. Be careful not to outprice your home for the market. Some optional extras are great, but they may not work for the area your home is situated in.
Market Effectively
Once renovations are complete, you’ll need to sell! The best way to ensure that you’re selling your properties at a profit is to invest in an effective marketing strategy. Collaborating with real estate agents and social media is a great way to get your property market-ready.
We also recommend having professional-grade photos taken of your property to boost its aesthetic appeal and showcase those amazing renovations.
You could advertise your property via social media, online portals, magazine ads, or by hosting an open house.
Resell the House
Now that everything is in place, all you have to do is resell the house!
Fix and flip investors often renovate and sell houses to owner-occupied homeowners, who have access to financing and are willing to pay a premium.
Some investors sell to other investors, both strategies can lead to substantial profit. We also recommend you consider the fees associated with the sale, such as appraiser fees, inspection costs, and legal bills. Having a competent realtor and property lawyer can help with this process, especially if you’re just starting out.
