Asset Based Lending - You Invest In Properties. We Invest In You. Asset Based Lending - You Invest In Properties. We Invest In You.
  • Home
  • Loan Programs
    • Loan Programs
    • Fix & Flip
    • New Construction
    • DSCR Rental
    • Bridge
  • Where We Lend
  • Who We Are
    • Who We Are
    • How We Work
    • Management Team
    • Lending Team
    • Reviews
    • FAQs
    • Careers
  • Learn
    • Learn
    • Blog
    • Hard Money Deal Calculator
    • Case Studies
    • In The News
  • Brokers
  • Pre-Qualify Now
  • Search Toggle
Latest Articles

Why Average Is Ideal For Fix And Flip Investors

February 7, 2018•3 minute read
Standard fix and flip investment

In most professions, success is based on standing out. In fix and flip real estate investing, however, success is often based on fitting in. When it comes to flipping a property, you want a home that fits the neighborhood; not one that is of dramatically higher or lower value than the rest.

Home value is tied to location.

While the price of your property will increase or decrease depending on the quality of the upgrades you make, your home value is tethered to the average value of properties in the neighborhood.
If there are no good schools or job opportunities nearby and all of the surrounding houses are falling apart, homebuyers aren’t going to be interested in the three-story home with a state-of-the-art gym and top of the line appliances; at least not interest enough to pay anywhere near full price.

Expensive homes take longer to sell.

Typically, higher-priced homes will sit on the market longer than lower-priced homes. The average time on the market is 52 days for lower-priced homes, 62 days for mid-priced homes, and 90 days for high-priced homes. One strategy for renovating homes is to stay within 10% of the average sale price in the area. This way, you can pretty much guarantee yourself that you don’t over-improve the property and price yourself above the market.
The houses that sell the fastest tend to be those close to the average home value in the area; in San Diego, the median home value is $555,800 and the fastest-selling price range is between $500,001 and $750,000 with an average time on the market of 45 days. As the price goes up, the time on market increases to an average of 147 days for homes over $4 million.

More upgrades can decrease your return on investment.

Because homebuyers don’t want to pay for over-upgraded homes relative to the area, your renovations will decrease in value as you add more to your property. Buyers expect certain things from a property and will pay more for them: things like modern appliances, fresh paint, and neat landscaping. Once you get out of the realm of what’s expected in your market segment, you’ll start to experience a diminishing rate of returns on your improvements.
Certain improvements may seem desirable but may not significantly increase the value of your property. Who would say no to a house with a full bar, game room, and movie theater in their home? For most people, though, those things are luxuries, not additions that they will shell out an extra $500,000 or $1,000,000 for in a neighborhood where most homes are going for $300,000.

Unusual means unpopular.

A good rule of thumb is that “unusual” means “unpopular.” While you want your house to stand out, you don’t want it to stand out too much. People like what is familiar and what is usual. Standard home designs sell the fastest: on average, Spanish homes sell in 47 days, traditional homes in 84, and ranch in 95. Custom and craftsman homes, on the other hand, typically spend over 100 days on the market.
More demand equals a greater selling price; if you limit yourself to a niche market with all custom features, there will be less demand and ultimately less value to the buyer market.


Purchasing a home is a major commitment, and most homebuyers search specific neighborhoods with the expectation that the home they purchase there will be in line with their neighbors’. It’s important to keep renovations within the realm of reason for the area. Otherwise, you risk holding onto the property for years – and slashing your asking price well below your property’s potential value in order to sell.
Make your house stand out with the little things; granite countertops, a fresh coat of paint, and some new appliances. If you want the best chances of generating interest from buyers and a selling price on the upper end of the range for your neighborhood, strive to be just better than the average homes your surrounded by to maximize your return on investment and minimize your time on market.

Back to blogs
Share:

Related Articles

Paul Lewis’ Deal Of The Month: Sarasota FL Fix & Flip

Paul Lewis’ Deal Of The Month: Sarasota FL Fix & Flip

Read More
Fix And Flips: Reality Vs. Reality TV

Fix And Flips: Reality Vs. Reality TV

Read More
Draw Management For Real Estate Investors

Draw Management For Real Estate Investors

Read More
Tips For Flips: Better Real Estate Investing Through 21 Tips In 21 Days

Tips For Flips: Better Real Estate Investing Through 21 Tips In 21 Days

Read More

Real Reviews from Real Borrowers

 

Great experience! They always answered or returned my calls immediately and walked me through the entire process and made sure all my questions were answered. I had a couple of questions weeks after my loan closed and they still responded immediately and made sure I was taken care of. Great experience and I would highly recommend ABL.

Cindy G.

I am glad I got to know Asset Based Lending, they made funding for my construction site very simple. They have a great team of people, that would go out of their way to help. Boris has been great and very helpful, I highly recommend them for all your Construction financing needs.

Mike A.

I have had the pleasure of working with Boris Akbashev for my real estate financing needs on my last 10-15 projects, and I cannot speak highly enough of his professionalism and expertise. Boris demonstrated a deep understanding of the lending process and went above and beyond to ensure I secured the best possible terms.

John S.

Truly a pleasure having ABL on every deal! Thanks to their lending expertise and timely support and guidance throughout the process to get the best loan for my deals. I can see my company growth from 1-2 flips to numerous flips, new construction, and DSCR loan to grow my portfolio.

Pedro E.

Asset Based Lending is the place to shop for all your construction needs. Their easy funding policy, makes life so much simpler for any builder to focus on building and not be worried about financing project. Boris was supper helpful to accommodate me with all me financing needs.

Ray P.
Inc 5000 Fastest Growing
Scotsman Guide - Top Workplaces
HWInsiders
National Mortgage Professional
Asset Based Lending - You Invest In Properties. We Invest In You.
30 Montgomery Street
Suite 150
Jersey City, NJ 07302
  • NMLS #2449622
  • CA License 60DBO-183897
  • CA License 60DBO-184824
  • Loan Programs
  • Where We Lend
  • Who We Are
  • Learn
  • Brokers
  • Careers
  • Document Library
  • Proof of Funds
  • Contact Us
  • Privacy Policy

info@ablfunding.com

P: 201-942-9089

F: 201-604-5449

Pre-Qualify Now Call Us
Decorative: Angled
Bigger Pockets
Manage Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
View preferences
{title} {title} {title}
Manage Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behavior or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage {vendor_count} vendors Read more about these purposes
View preferences
{title} {title} {title}