House Flippers Need the RISC™ Report – Here’s Why

house-flippers

The RentFax RISC™ index is critical for House Flippers.  In this video, RentFax co-founder Shane Sauer discusses how the using the RISC index can help ensure success for real estate investors with an exit strategy of selling to a retail buyer, also known as house flippers.

I wanted to put together a quick video for house flippers that are buying homes with the intent or purpose to resell them to an owner-occupied person or a regional flip sometimes they’re called. There’s a misconception that RentFax is strictly for the use of long-term hold rental property and that’s not accurate. As a matter fact many of our clients are not property owners themselves but property managers lenders insurance companies, crowdfunding and hedge funds… anyone that touches real estate investment property whether it be for flipping, long-term hold, or other purposes.

I’m going to you quickly walk through four examples of house flippers… of some critical pieces the information you’ll want to be aware of, because despite quality at the asset or the home and the amenities that you put into the home, if the home is located in a neighborhood with a demographic that doesn’t support your in strategy for investment, despite all your efforts in creating a beautiful home and the audience will not be there to support your success.

On this first property what we see here is the first page of a RISC detailed report As we can see the score is in the lower or end of the stability spectrum, or below 20 so who as a rental property this indicates a low likelihood up income stability when as any house flippers what this means  this particular my location was of interest to me because the home was a new built and there was a beautiful looking home not very reasonably priced had a lot positive attributes to lead when reviewing it what we discovered and brought to the attention of the prospective investor is a fairly critical makeup of the neighborhood. That being that the predominant housing type in a neighborhood was apartment complexes in not single-family homes. And so the audience of which would be attracted to that demographic for single-family home purchase may be lower.

This next example is a property that scored a 32, so we are moving up in the RISC index, and we can see when we at this particular property is located in Fort Myers the prior one was in Houston. When house flippers look at this 32 score we can see that there’s a more of a blend of single-family home so that’s good… so they’re will be higher audience of potential homeowners or single-family homes. Now we also want to pay attention to the occupancy of that make up – in this particular case just short of two-thirds the population in this neighborhood are owners of their homes versus renters, so we’re trending in the right direction if our exit strategy or investment strategy is a flip.

This particular neighborhood is a great neighborhood to go in if your strategy is a lease-purchase. I always hear house flippers say… well if I can’t sell it then I’m going to rent it. Well that only works if you’re in a neighborhood where renters are interested and where renting a property is financially feasible.

In this final example I wanted to show you a situation where it was a great neighborhood insofar as being very stable and attracting owners…. this particular one being in Georgia. You can see its scoring in the dark green and the eighties, and what we find here is that we have a strong concentration single-family homes, so that’s good if we are flipping this single-family home. And the corresponding ownership rate in this particular neighborhood was strong as well at almost nearly 90 percent. But look how low the renter percentage is at 10 percent. So in this particular neighborhood in the event that house flippers say if I can’t sell it I’ll rent it or move into it or lease-purchase the likelihood is attracting runners to this area in a financially viable situation or financially feasible -meaning that you won’t be in a negative cash flow situation drops.

As a flipper I can use RentFax in the risk index to help make better decisions on the neighborhood’s that are optimal for my strategy, avoiding high quality assets in neighborhoods that have demographics that don’t support or attract homeowners – as we saw in the first example. Or in the next two examples we saw neighborhoods that will work support potential home ownership, but also can offer good options for lease-purchase or renting if that property didn’t sell quickly. And the fourth and final sample is a strategy where your sole and dedicated purposes to sell the property.

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