How Do I Make Money Flipping a Chicago Property?

How Do I Make Money Flipping a Chicago Property? (Source: pixabay.com - used as royalty free image) 

Ever dreamed of making it as a real estate mogul? Wanted to turn an old, deserted property into a gleaming moneymaker?

Experienced homebuyers and neophytes alike have dreams of making big bucks from “flipping” a Chicago home. For those feeling a little lost, flipping is the process of buying a property very cheaply, fixing it up, and turning it around to a new buyer for a big profit. It’s a process that’s been documented time and time again on lifestyle TV, and some people really do make a substantial living off of it.

Want the inside scoop on becoming a house flipper here in Chicago? Here’s what it takes to get started:

1.) Understand What You’re Getting In To

First, it’s important to realize that the breezy lifestyles of “home flippers” as presented on channels like HGTV aren’t really what you can expect as a first timer. TV shows are all about great drama and beautiful imagery, and you can’t expect them to accurately convey real life – even on a so-called “reality” show. On even the most truthful real estate TV show, you can expect to see heavily edited timelines, massively adjusted budgets, and a team of behind-the-scenes pros that most of us just won’t ever have access to.

Professional home flippers operate with lots of specialized, insider access and knowledge that even an experienced home buyer may not have. Flippers start by buying a property with very, very little market value and a very limited audience of buyers. The great profits they see after a successful “flip” come from keeping their costs relatively low; often, these savings come from the flipper acting as their own “general contractor,” cutting out the costs of other labor and buying their materials directly, often getting discounts thanks to their long-term relationships with suppliers.

In short, home flippers who are able to make a living do so by finding the greatest percentage gain in value while keeping their costs as low as possible, often by means of connections and experience that most of us won’t have. Are you ready to sink in plenty of time – and lots of overhead costs – on a potential flip? If you have any doubts, house flipping may not be the right investment opportunity for you.

2.) Invest in Projects With High ROI

So, in the middle of a flip, what home elements should be the focus if you’re looking to make the most money? While it’s important to stay up to date with décor trends, fads come and go; projects that add real value, on the other hand, will always be important – and offer consistent ROI, to boot.

We’ve written about some of the most consistently profitable home renovation projects before; with our thanks to Remodeling, HouseLogic, and Lifehacker, here are a few of the projects with the most consistent, long-term ROI since 2002:

  • Replacing an entry door (98% ROI)
  • Replacing current siding with fiber-cement or vinyl (83.9% ROI and 81.5% ROI)
  • Installing a deck addition (80.6% ROI)
  • Remodeling the kitchen (81.8% ROI)
  • Replacing the garage door (80.7% ROI)

3.) Know the Neighborhood

Think of the first real estate TV show that comes to mind. Where do those house flipping or renovation experts work? Atlanta? British Columbia? Southern California? Los Angeles? It’s extremely important to realize that the housing markets you’re used to seeing on TV won’t necessarily reflect the reality of the market here in Chicago.

It’s also important to realize that Chicago is a city of neighborhoods. A truly profitable flip may take a keen eye, an astute sense of market trends, and a lot of patience for market values to catch up with your investment property. A few ideas for finding (and flipping) a great deal:

  • Keep a close eye on condo and single family housing stats for your target neighborhood, and any around it
  • Read, read, read. Sites like Curbed Chicago often keep a close eye on housing market trends, and local papers and home listings can give you a sense of what comparable properties are going for in locations around the city, as well as market factors to watch
  • Realize that home values are affected by all sorts of factors, ranging from governmental stability to economy at large to the price of gas. Study up!
  • Talk to a real estate agent with plenty of knowledge and experience about the ins and outs of the Chicago marketplace

That last point? That’s where we come in! Our team has decades of experience helping investors and developers buy and sell in neighborhoods across Chicago, and we’d be happy to share what we’ve learned with you. Drop our team a line using the form below to get the conversation started!

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