Creating a House Flipping Exit Strategy

One of the biggest risks of fix and flip investing is the risk that you won’t be able to resell the home in a timely manner and at a price that you’re happy with. It’s essential to have a plan before you begin any house flipping project as to what your projected final value will be. But even with all of the planning in the world, investors can’t always predict what the market will do.

If there is a sudden housing market crash, an unexpected major problem arises with your flip, or buyers simply don’t take to your property, what can you do to save your investment?

The best course of action is to have a house flipping exit strategy in place before you even get started on your flip. You should be working with solid projections as to your final value, target listing date, and an appropriate initial asking price. You may want to start with an aggressive listing price that is a little above market value and slowly lower the price if no buyers bite. Or you might want to start with a low asking price with the hope that multiple bidders will swarm and ultimately boost the final offer.

Whatever your initial plan, you should also plan for the contingency that the house stays on the market longer than you’d like. Maybe you can afford to keep it listed at a set price for a few months. Maybe you’ll need to take the listing down and rent the property as soon as possible to avoid big losses. Your preferred course of action will depend upon just how much capital you have at stake and how much you can afford to gamble.

If you already have a flipped house listed that isn’t selling and you’re not sure what to do, you’ll need to weigh your options quickly. If you haven’t already, here are a few steps you should consider taking:

  • Consult with a realtor to get an assessment of whether your asking price is too high. A good realtor can help you choose an optimal asking price to attract offers. You can and should also have a professional realtor arrange open houses to help you promote the property to more potential buyers.
  • Consider staging the home with furniture and getting professional photos taken. Sometimes it’s difficult for buyers to imagine the potential of a property without any furniture inside.
  • Double check your listings on house hunting apps. Make sure that your featured image shows off the best asset of the home, whether that’s its kitchen, huge backyard, or lovely street.
  • Considering finding someone to rent the home. A renter can help protect your investment and pay down your rehab loans while you wait for a better time to relist the home.

For more advice, give our office a call at 559.326.2509 anytime. We’re always here to help.

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Posted in Fix & Flip Loans, Fix & Flip Tips