Are you looking to enter the Virginian house-flipping business but don’t know where to start? Are you afraid that your first flip will, in fact, end your career as a house flipper in the State of Lovers?
Don’t worry; We’ve got you covered!
We have gathered all the information you need to start successfully flipping houses in Virginia.
- Why Should You Consider Flipping Houses in Virginia?
- Is Flipping Houses in Virginia Profitable?
- Best 5 Cities to Flip Houses in Virginia
- How to Start Flipping Houses in Virginia: Five Steps
- How Much Does It Cost to Flip Houses in Virginia?
- Is the Current Housing Market Good in Virginia?
- Do You Need a License to Flip Houses in Virginia?
- Other States to Look At for Profitable House Flipping
- Wrapping Up
Why Should You Consider Flipping Houses in Virginia?
Do you still have doubts about whether you should or should not start a house-flipping side hustle in Virginia? Here are three reasons to consider the Virginia real estate market.
Highly Profitable State
That’s caused by an interesting real-estate market landscape, with the demand for new houses rising every year. This, combined with affordable construction materials and professional labor costs, gets you a huge ROI for every property.
Good Price Growth
The average home value in Virginia has grown by ~3% in the last year. Priced at $372,943, Virginia houses are some of the best-performing real-estate assets in the country.
The Virginia housing market is booming as the state becomes the 10th safest in the country. On top of that, in comparison to popular states like California, New York, and Washington, Virginia is considered relatively affordable.
Property taxes are also a factor that increases the purchase price in Virginia. Compared to the national average of 1% property tax, Virginia only has an average effective property tax rate of 0.75%.
Great Financing Opportunities
Taking loans to finance your first house flip is considerably easier in Virginia compared to other states because properties cost less. Therefore, banks or hard money lenders can risk less giving $300,000 for a property in Virginia compared to the $1,000,000 for a property in California.
Also, due to the high demand, the real estate market in Virginia is highly liquid. The bank could easily sell the house and get their cash back if you can’t repay the loan.
Is Flipping Houses in Virginia Profitable?
Yes, flipping houses in Virginia is profitable. According to a recent AttomData report, Virginia house flippers have grossed an average of 26.9% profit from every investment property.
If you consider that the median home value in Virginia doesn’t go above $400,000, home flipping turns out to be pretty profitable for real estate investors.
Best 5 Cities to Flip Houses in Virginia
Here are the best five cities you can start flipping houses in. When choosing, you should consider your budget, available time, and current location.
Virginia Beach is one of the best cities to live in Virginia. Residents can benefit from a thriving economy, with a low unemployment rate of 2.7%, a culture prioritizing health, and the most competitive tax rate in the Hampton Roads area.
This advantageous living environment raises the demand for houses, apartments, and other residential properties. Therefore, house flippers can buy, repair and sell more properties yearly.
- Median property price: $374,000
- Year-over-year property value growth: 10%
- Year-over-year population growth: 0.4%
Chesapeake is a small suburb of Norfolk and is about a half hour from the beaches at Virginia Beach. It is a small, vivid city with excellent schools, low crime rates, and abundant recreational opportunities.
Chesapeake is a great place for kids and families wanting a slow, peaceful life. The house prices match the median household income in Virginia, giving real estate agents and house flippers a golden opportunity of high demand and low supply.
If you want to start selling properties in Virginia, Chesapeake is a great pick.
- Median property price: $389,720
- Year-over-year property value growth: 3.9%
- Year-over-year population growth: 0.64%
Richmond’s lovely social scene, rich history, growing job market, and thriving food industry have made the city one of the primary investment opportunities for families who want to buy a Virginia house.
The market value of houses in Richmond has almost tripled in the last 20 years, clearly indicating a growth in the demand for both investment and residential properties.
- Median property price: $388,500
- Year-over-year property value growth: 12.3%
- Year-over-year population growth: 1.06%
Norfolk is known for its thriving arts and culture scene. It is home to numerous museums, theaters, and galleries that attract millions of tourists annually. Consequently, some fall in love with the city and move there, creating a huge demand for new houses.
On top of that, the city is home to several military bases, including the world’s largest naval base. This means that the average profit for a house flipper is higher as the city’s population is constantly moving.
- Median property price: $311,000
- Year-over-year property value growth: 7.2%
- Year-over-year population growth: -1.5%
Roanoke is one of the most popular cities to live in Virginia. The cost of living, 8% less than the national average, paired with the beautiful views and amazing food, transformed this city into a haven for freelance workers and digital nomads.
That is why the population is constantly growing and, as a by-product, the demand for new houses constantly increases.
- Median property price: $280,000
- Year-over-year property value growth: 10.6%
- Year-over-year population growth: 2.2%
How to Start Flipping Houses in Virginia: Five Steps
Here, we have gathered five easy steps for you to start flipping houses.
1. Research the Housing Market
Start your house-flipping journey by researching the real estate market in Virginia. Try to understand what the prices are, what type of properties sells best, and the factors that impact the price of a property.
If you’re new to the industry, find some renowned property investors or house flippers and study their cases. Draw up some patterns and comprehend how they operate. This will give you a basic idea of what the market wants, what is the real median home price and more.
2. Find a Virginia Property
After the research part, you can start looking for a real property to purchase. While searching for houses online in today’s market is better, you can always go the old-fashioned way, picking up the phone and dialing local real estate agencies.
Also, this is the best time to understand what a healthy profit margin is for a real-estate flipper, as you can’t choose a house without knowing the basics. The most important formula you must keep in mind is the ARV or the after-repair value.
What this formula basically says is that the ARV should equal the MAO+fixed costs+rehab costs+desired profits. In this case, MAO stands for the maximum allowable offer.
The maximum allowable offer is the amount of money you’ll spend to purchase the property. As a rule of thumb, your MAO should not exceed 70% of the ARV minus repairs.
3. Raise Capital
After you find the best property, it is time to find the money to buy that house. Unless you are paying cash, you must find a place that gives out hard money loans. When taking a hard money loan, you’re using the property you invested in as collateral.
Hence, if the deal is not profitable and you can’t repay the loan, you’ll just give up the house, cover some minor differences, and you’re set for the next flip. That’s why these loans are relatively safe and infinitely better than traditional mortgages regarding house flipping.
You can also go after a private investor. It can be your dad, uncle, or the man you play poker with during weekends. However, these types of loans are a bit more dangerous due to their non-traditional nature.
4. Renovate the Property
This might be the most important part of the whole process. You can either turn the renovated property into a profitable asset or a money pit that will never return your investment.
Even before closing the deal on the house, you need to find a great renovation crew. The team behind the renovation process is as important as careful planning and qualitative materials. That’s why you don’t want to screw this step up.
Create a detailed construction plan and start as soon as possible. Remember, every lost day costs you a lot of money. You might also want to start a spreadsheet tracking the renovation costs.
Pro Tip: Don’t spend every penny you’ve got. You might have unexpected fees or repair costs you’ve never considered.
5. Sell the Property
Selling the property is the last step of your house-flipping journey, but not the easiest. There are two ways of selling a newly renovated house: sell it through a real-estate agency or sell it yourself.
The first method is easier. You just have to contact a professional real estate agent, and he will take care of all the things that need to be done. Of course, you’ll have to pay for his service.
The second method is more complicated. However, if you’re on your first flip, you should take this route to raise your profitability and get the necessary experience.
The first thing you’ll need to do is acquire, rent, or borrow a camera. Taking high-quality pictures of your property will increase your chances of selling it.
Upload the pictures on as many real estate marketplaces as you can, describe the property and what you’ve done with it, and wait for the call.
If you did everything right, starting with the research and ending with the picture and the description, you should get a call on the same day.
How Much Does It Cost to Flip Houses in Virginia?
Four major components determine the price of flipping a house: purchasing price, closing costs, rehab costs, and marketing costs. Let’s elaborate on those concepts so you understand how much you’ll spend on your first flip.
- Purchasing Price: This is the price of a house on the open market. For Virginia, the median home prices can get up to $335,198. But remember, you can always flip a house without that much money in your bank account. Just take a loan!
- Closing Costs: These include all the fees related to closing the deal. Attorney fees, title searches, lender fees, and more. You should plan for closing costs of 5% to 6% of the purchasing price, just to be sure.
- Rehab Costs: This is, perhaps, the second most significant sum of money you’ll spend. The rehab cost includes professional labor, building, and cosmetic materials. Usually, professional flippers tend to pay 10% to 15% of the purchase price on rehab.
- Marketing Costs: Selling the house involves additional expenditures as well. We are, of course, talking about real estate commissions. Typically, high-end real estate agents take up to 6% of the sale price.
To sum everything up, you will probably need to invest up to 30% of the purchasing price to flip the house and make a profit.
Is the Current Housing Market Good in Virginia?
Yes, the current housing market in Virginia is strong and competitive.
With a high demand for housing due to the state’s growing population and robust job market, home prices have steadily risen.
However, you must be aware that many real-estate and finance analysts are predicting a housing crash in the near future. Many fear the 2008-2009 real-estate market crash will repeat as the United States approaches recession.
Thus, the prices might go down.
Do You Need a License to Flip Houses in Virginia?
No, you don’t need a real estate license to flip a house in Virginia.
A license is not required even if you buy a home as an investment property. That is why Virginia became so popular among house flippers from all around the US.
Other States to Look At for Profitable House Flipping
Here are some other states you might find promising for profitable house flipping:
- Flipping Houses in Texas: While the median sale price in Texas is down 0.83% over the last year, the market is still full of opportunities to make money. You just have to get them!
- Flipping Houses in North Carolina: North Carolina stays at the top regarding the median sale price increase. Over the last 12 months, the median sale price has increased by ~4.4%. This is your chance to make some money!
- Flipping Houses in Illinois: The median sale price for a house in Illinois has increased by over 4.6% in the last 12 months. Do you feel the money?
Flipping houses might seem scary for a novice. Still, if you can overcome the fear of losing your investment, this turns into a highly profitable business with many possibilities.
Let us know if your first flip was profitable in the comments below! Also, if you liked the article, why not share it with your friends?