The Ultimate Guide to Flipping Houses in Marin County

Marin County remains one of the most popular places to live in the San Francisco Bay Area, just across the Golden Gate Bridge and stretching into Wine Country. Home prices have historically been high, but with some work and savvy, home flippers can always find opportunities in the beautiful communities that line the far northern portion of the bay.

The cost of housing has dropped in Marin County recently, with the median price dropping to $1.7 million during the spring, according to data released by the county’s assessor’s office and reported by the San Jose Mercury News. That was down from $2.12 million a year earlier. Low inventory remains an issue, which is why Marin County continues to be a seller’s market.

House flipping has become incredibly popular recently, thanks mostly to several home-improvement shows and because of the potential to make a relatively quick profit. Whether it’s an easy profit depends on how good a job house flippers do in finding the right properties and then deciding how much work needs to be done.

House flipping is when investors buy homes that are either undervalued, distressed, or both, for a relatively affordable price. They then add value by remodeling the home, making important upgrades, or at least making cosmetic fixes, and then flip it by selling it as quickly as possible and for a nice profit.

There are many keys to flipping houses in Marin County, starting with finding the right properties and then deciding how much work needs to go into them. The most successful house flippers take the big picture into account and usually do more than just cosmetic fixes. That’s because, with the high cost of housing, buyers are savvier than ever in giving homes a thorough check before making an offer. Many house flippers also know that it’s important to consider style and luxury touches when flipping homes because of the upscale nature of Marin County.

House flipping can also mean simply purchasing a home and then holding it until you can sell it for a profit. Depending on current market dynamics, you can rent it out short-term while waiting for prices to go back up.

The key to flipping houses in Marin County is to identify the right property from the get-go. The best properties for flipping include distressed properties, which is a term for houses that are on the brink of being foreclosed, also known as pre-foreclosure, or have already been foreclosed by a bank. These properties are desired by house flippers as they can often be purchased at a discount because banks want to recoup the amount of money that was owed by the borrower.

Another way to find a great deal is to look for short sales. That’s when a homeowner, with the bank’s permission, sells a house for less than the remaining mortgage amount to avoid the serious impact a foreclosure will have on their credit report. Experienced house flippers have become adept at identifying and purchasing distressed properties, often by making lowball offers. In most cases, buyers must pay cash for distressed properties sold at auction.

The best house flippers know not to get emotionally attached to a home because they’re going to try to flip it for as much money as possible rather than live in it. As you get involved in flipping houses in Marin County, you’ll become familiar with the 70% rule, which will help you determine whether a certain property is worth the risk and how much you should spend on it. The rule states that investors shouldn’t buy a distressed home property for more than 70% of its after-repair value (ARV), or how much the house will likely sell for once repaired, minus the cost of repairs.

Consulting with a real estate agent will help you determine the ARV of a home. Then you need to estimate what work needs to be done and how much it will cost. With those figures in mind, apply the 70% rule, and you’ll have an idea of what you should offer for a home. Remember, the 70% rule is a guideline, not a guarantee. Keep in mind there could be unforeseen problems that pop up later that you’ll have to deal with.

There are several ways to finance a flip, and investors need to know what they’re doing to avoid taking unnecessary risks. Buying a home with cash is usually the best option, although not everyone has the money needed in an expensive location like Marin County, even for distressed properties.

There are mortgage options available. Among them are hard-money loans, which are made by private lenders on a short-term basis, but they usually have higher interest rates. Another option is Fannie Mae’s HomeStyle Renovation Loan, which will finance the home purchase and the cost of any renovations. To minimize risks, consult a financial adviser or real estate expert.

San Rafael, Novato, and Mill Valley are the largest cities in Marin County and, therefore, could have a certain number of distressed or fixer-upper properties for flipping.

Smart home flippers know what upgrades make sense both from the standpoint of maximizing return on investment and what fits in well in the neighborhood. For instance, attractive exteriors are great selling points in such a beautiful area, so painting or replacing the front door and upgrading the landscaping makes sense. Other smart upgrades include new kitchen countertops, perhaps in synthetic stone, and bathroom upgrades like a new vanity and new fixtures in sleek, stylish designs.

These are the basics of flipping houses in Marin County. For all your real estate needs, whether buying or selling homes or needing help flipping a home, contact the county’s top real estate expert, Marin County native Eric Schmitt, today.