In yesterday’s post, I stated three main obstacles that real estate investors have to overcome when flipping condos. After all, most people who get into the business of real estate investing intend to learn how to flip houses. But flipping condos can bring its own rewards — if done with the right mindset and game plan. And as Hawaii has more than its share of condos, this is a great thing!
3 Reasons for Flipping Condos
1) More Accurate Comps – Yesterday I talked about the ‘cookie cutter’ buyer mentality where potential home buyers will look at other units in the building when deciding whether you’re asking a fair price for your flip, potentially discounting items you’ve done to make your condo stand out.
However, this can also work in your favor in your own deal analysis before you buy. It’s a lot easier to project what a fully renovated condo will sell for if you have true apples to apples comparisons within your own building — same layout, same exact square footage, same views, etc. With single family houses, there’s more ‘tweaking’ involved in figuring out your After Repair Value (ARV) when trying to compare homes of different sizes, beds and baths, sold date, etc.
2) Constant Advertising – If you’re flipping houses, you should ideally have a sign out in the front yard so that motorists driving by can see your logo and phone number and associate you with the up and coming hot house flip in the neighborhood. However, you don’t have a front yard with a condo — at least not one that’s exclusively yours.
But all is lost, my savvy friend. How about putting a sign on the front door of your unit where people won’t be driving by but walking instead?! Walking gives them more time to linger than driving by at 40mph. You might also be able to put a flyer or index card in a display case by the mailboxes in the lobby where all the other residents stop by daily — and talk.
Yes, you’re creating buzz. Put a website URL on the flyer and start driving traffic where residents can check out photos and videos and join your buyers list. That’s exactly what we’re doing on our current luxury flip at the Royal Iolani. Sign on the front door and flyers in the lobby.
3) Grandma’s Not Ready for a Nursing Home – If you haven’t noticed, people are living longer and longer these days. Here in Hawaii, we have some of the healthiest people in America and our elderly population is enjoying more life in their later years. But not all of them want to enter a nursing home and join the ‘old folks club’. Many elderly residents still want to live independently in a home like they have for most of their lives.
But a condo still offers many perks that the elderly will appreciate — elevators instead of stairs to climb, security aka peace of mind, and freedom from many maintenance duties. In addition, many condo buildings will still have community events for the residents without it feeling like a forced activity by the AARP. The recent holiday potluck at the Royal Iolani was super fun and very well-attended — everyone was having a blast, older and younger owners alike.
So if you’re in the business of flipping houses, don’t discount flipping condos just because it’s outside the norm of what you hear most real estate investors do. If you understand the pros and cons, do your homework and have a solid gameplan, you can make a lot of money.
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