Florida has always been popular with vacationers. The stream of people looking to soak up the sun and play golf on America’s finest courses provided a steady income for landlords. But the pandemic has made its own adjustments. Now these people want to live in Florida permanently. For investors, the golden time of flipping has begun — the resale of houses after renovation.
Secrets of profitable flipping.
Flipping is not about quick income, and as practice shows, a very complicated way of investing in real estate. Much easier to buy and try to resell as it is. But if you want to get the maximum profit from the deal, then a house with a fresh modern renovation will bring a lot more money.
In order to reduce the risk of “burnout” to the very minimum, experienced flippers use three golden rules:
1. The value of the house should be about 70% of the estimated selling price of the property. You can’t call it a good deal otherwise.
2. Assemble an experienced team of builders and sellers. Every day you own a property reduces your bottom line.
3. As accurately as possible to assess all the costs of buying and selling a house, its maintenance and, of course, the repair itself. As a rule, investors who are just starting to work in this area describe in detail the estimates for building materials, but completely forget to include re-registration of documents or an electricity bill in the expense item.
Who needs housing in Florida.
The Florida real estate market grew 6% in the quarantine year 2020. According to experts, next year it will also grow from 3 to 6%. This is due to the attractiveness of the place itself, with the climate, with the demand for houses close to the luxury class, and with the ideal conditions for raising children. Since in cities such as North Port, Margate , Cape Coral, the safety rating is 8.5, and in Weston it is even more than 9. The average school graduation rate in Florida is 88%, which indicates a good environment and a safe society.
Therefore, when buying the property and its subsequent repair should bear in mind that your potential customer is likely to be a young family with children with an average income of 50–55 thousand dollars.
In cities such as St. Petersburg, Orlando, Tampa, there is always a demand for specialists and workers, so here potential clients can be young couples — without children, building a career and preferring an active lifestyle. They will appreciate a gym within walking distance, a coffee shop on the ground floor and a good bar around the corner.
Florida market in numbers.
The median home value in Florida is $ 246,107. At the same time, prices are completely different in each area. In Naples, a house “for renovation” will cost 329 thousand dollars, and in Pensacola only 132 thousand dollars.
By the way, Pensacola has become the fastest growing market in 2020. Over the year, prices have increased by 10.9% and a further increase of 7.1% is expected. And Naples is popular all year round with visitors to enjoy the beautiful weather, so you should resell houses there.
St. Petersburg is famous for the fastest deals — about 66 days. The value of real estate increased by 5.6% in 2020. Today, the average home value is $ 218,500. Experts predict a 2.8% rise in prices next year.
As for flipping , an investor can receive about 55–60 thousand dollars from one resale. And this includes deductions for repairs and team work. Depending on the initial state of the house and the flipper’s idea, the transaction from purchase to sale can take from 2 months to a year. Undoubtedly , the Florida market is attractive to both buyers and sellers, both landlords and tenants. The main thing is not to forget that any real estate investment requires careful verification and accurate calculation.
A new solution optimizing flipping houses.
Fincase creates unique IT solutions in the real estate industry that allow you to fully automate the entire cycle of working with property. The company is using artificial intelligence and machine learning algorithms to transform the real estate appraisal market.
Investors evaluate real estate according to two main criteria: good profitability and high liquidity. And if profitability allows you to make money in the process of owning an asset, then liquidity determines how successful the exit from an investment project will be. When measuring liquidity you need to take into account location, market state, characteristics of the building, and many other factors. Due to the high risks associated with real estate transactions, it is more reasonable to carry out an automated assessment of all indicators, which eliminates the possibility of error due to the human factor and increases accuracy through the use of data analysis technology. The new solution of FinCase is applicable to all areas of business related to real estate transactions (banks, investment holdings, real estate agencies, etc).
Lev Berezhnoy, CTO of Digital technologies development foundation highlights the importance of the project: “The company Fincase specializes in the implementation of automatic assessment systems in property values conducted using machine learning techniques. The software product “Search engine for undervalued units in the real estate market”, created by a team of professional analysts, big data specialists and developers, allows screening, analyzing and determining the value of a real estate unit or land plot based on public data on analogues. The assessment is carried out both for the current date and in the future, which allows building economic models of the property’s revenue over time.
With such an advanced IT product, flipping can become a highly profitable investment tool based on a scientific approach. Having trained the program to find certain types of real estate, you can create an excellent portfolio in a short time in automatic mode, which over time will bring considerable income. And this is an example of the application of advanced technologies to solve practical problems.”
Dmitry Tsyplakov, CPO of Fincase
Lev Berezhnoy, CTO of Digital technologies development foundation