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How To Flip Houses In North Carolina

How To Flip Houses In North Carolina: Step By Step (2024)

flipping houses real estate investing strategies real estate markets (states) Dec 14, 2023

Those who learn how to flip houses in North Carolina may be able to generate a profit of their own. If you want to start flipping homes in the Tar Heel State, this guide will teach you everything you need to know, including:


*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step)Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house in North Carolina as a beginner! 

 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!


                                                                                                                           

What Is Flipping Houses?

Flipping houses is a real estate investing strategy where investors buy an undervalued home, improve its value by making upgrades, and sell the asset for more than their total investment.

The best investors optimize profit margins at every stage, buying low, upgrading on a strict budget, and selling high.

Read Also: Is Wholesaling Real Estate Legal In North Carolina?

                                                                                                                           

North Carolina House Flipping Statistics

house flipping north Carolina statistics

Despite negative sentiment surrounding the U.S. economy, home flipping remains a lucrative investment strategy in every state — and North Carolina is no exception. 

According to ATTOM Data Solutions’ third-quarter 2022 U.S. Home Flipping Report, 92,422 single-family houses and condominiums were flipped at the end of last year. The average gross profit was $62,000, or a return on investment (ROI) of 25%.

According to Zillow, the median home value in North Carolina is $320,716. At its current level, the average price of a home has increased by 2.7% over the last 12 months. For added context, the median home value in the United States is $346,048 after appreciating 2.2% last year (as of December 2023).

While homes are selling at a discount relative to the national average, the pace of appreciation may level the playing field sooner rather than later. If for nothing else, the state doesn’t have enough inventory to keep up with home buyers. Higher interest rates are slowing mortgage applications, but the lack of inventory will continue to push prices higher —albeit slower than in recent history. 

While home prices are historically high, investors can turn to the state’s distressed inventory. According to SoFi, North Carolina has the sixteenth highest foreclosure rate. “Out of 4,673,933 homes, 1,227 went into foreclosure” as recently as March 2023.

New foreclosures hitting the market and relatively low home values should make it easier to find an investment property.  


Thinking about investing in real estate? Join Alex Martinez at his FREE training to learn how to get started with house flipping and wholesaling!


                                                                                                                           

How To Flip Houses In North Carolina (7 Steps)

The steps outlined below should help you learn how to flip houses in North Carolina: 

  1. Find A House-Flipping Mentor
  2. Research The North Carolina Housing Market
  3. Find & Analyze Distressed Properties In North Carolina
  4. Raise Capital To Fund The Deal
  5. Close On The House
  6. Renovate The Property
  7. Resell The House

steps on how to flip houses in north Carolina

1. Find A House-Flipping Mentor

Aspiring real estate investors should find a house-flipping mentor. Enlisting the services of someone who has already done what you want to accomplish is a great way to learn the ins and outs of a complex industry.

Also, there’s no need to reinvent the wheel. People have been investing in North Carolina successfully for years, and there’s no reason you can’t follow in their footsteps.

2. Research The North Carolina Housing Market

Before you invest a dollar, you will want to learn everything you can about the local housing market and the strategies that work within it. These websites are a great place to start researching the real estate market:

3. Find And Analyze Distressed Properties In North Carolina

After minding due diligence and researching your local market, it’s time to analyze individual houses. In doing so, new investors may want to start with the 70% rule.

To use the 70% rule, determine a home’s after-repair value (ARV): how much it would be worth rehabbed. Checking nearby “comps” will give you the most accurate ARV. Take the ARV, multiply it by .70 (or 70%), and subtract the amount you budget for repairs. The answer is the maximum allowable offer (MAO) — the most you could spend on the home and still make money.

The 70% rule is flawed; it’s far from perfect. It should never be used on its own, only as a compliment to a more extensive valuation strategy. However, it does give new investors a place to start analyzing deals.

Read Also: How To Find Distressed Properties To Buy

4. Raise Capital To Fund The Deal

To raise funds for a deal, investors usually turn to their most trusted source of capital: short-term private money loans. It is worth noting, however, that private money comes at a cost. While interest rates will vary from lender to lender, it’s not uncommon for rates to reach as high as 12% — almost twice as much as a conventional 30-year mortgage. In addition to higher rates, private money lenders will require a promissory note and a mortgage (or trust deed) to protect their investment.   

In return for agreeing to the strict terms, investors will gain a strategic advantage. They’ll gain access to the funds they need almost immediately, giving them a competitive advantage when making an offer, all without a down payment.

While private money is a great source of capital, it’s not the only way to finance a deal. Thankfully, North Carolina real estate investors have several options. If private money isn’t available, investors may resort to:

  • Flip Loans
  • Hard Money Loan
  • Seller financing
  • Joint Venture Partnerships
  • Other Forms of alternative financing

Read Also: Hard Money Lenders 101: What Are They & How To Find Them

5. Close On The House

Property investors will close on the house after fundraising. A typical real estate closing will include the following steps:

  • Contract Negotiations: Buyers and sellers will negotiate with each other and ultimately draft a purchase and sale agreement under the supervision of a qualified attorney.   
  • Attorney Review: North Carolina operates under an “approved attorney system,” where authorized legal representatives conduct the real estate closing. Licensed attorneys will prepare and review all the legal documents in the closing process.
  • Property Inspection: The buyer will have the property inspected by a professional to confirm its condition and identify any potential red flags that may break the original contract.
  • Title Search: Attorneys will oversee a legal search of public records to confirm ownership and proper title. The title search confirms the seller has the right to sell the home and that there are no liens that will complicate the title chain in the future.
  • Closing: The attorneys will have each party sign all the necessary documents and facilitate the transaction. After the papers are signed — and the closing costs paid — ownership and title will transfer to the buyer.
  • Recordation: The new chain of title will be recorded in the county Recorder’s Office.

6. Renovate The Property

Renovating a property to flip has everything to do with generating the most attention at the most affordable price. Minimal rehab costs will stir up competition and perhaps even lead to a bidding war, further helping profit margins.

According to Remodeling Magazine, the best improvements investors can make in North Carolina include, but are not limited to:

  • Manufactured Stone Veneer: It costs about $10,648 to install manufactured stone veneer, but investors can expect to recoup about 92.5% ($9,845) of the initial investment.
  • Garage Door Replacement: It costs about $3,962 to replace a garage door, but investors can expect to recoup about 92.1% ($3,649) of the initial investment.
  • Midrange Kitchen Remodel: It costs about $26,921 to remodel a kitchen with midrange appliances and materials, but investors can expect to recoup about 68.6% ($18,481) of the initial investment.
  • Vinyl Window Replacement: It costs about $19,900 to replace and install vinyl windows, but investors can expect to recoup about 65.4% ($13,022) of the initial investment.
  • Wooden Deck Addition: It costs about $17,038 to add a wooden deck to a house, but investors can expect to recoup about 64.5% ($10,986) of the initial investment.

7. Resell The House

When the time comes to resell the house, you must act fast. Every day the property goes without being sold, it incurs more holding costs. Returns slowly start to diminish in the wake of additional property taxes, extending insurance coverage, ongoing utility expenses, and more. The longer you hold a property, the longer you remain occupied, illiquid, and unable to move on to the next project.

Working with real estate agents and professional staging companies expedites the process. A great real estate agent will price the property accordingly and tap into their network to sell quickly. A professional staging company, on the other hand, can compound the benefits of an agent or Realtor. A properly staged home can sell faster and for more money than one that sits empty.

According to a survey conducted by the International Association of Home Staging Professionals and covered by the National Association of Realtors, “staging helps sell homes three to 30 times faster than the nonstaged competition. Furthermore, staging can help increase the sale price by up to 20% on average.” 

                                                                                                                           

How To Find Houses To Flip In North Carolina

To find distressed homeowners in your area, consider implementing the following tactics:

  • Visit the county Recorder’s Office
  • Attend foreclosure auctions
  • Direct mail campaigns
  • Identify poorly kept homes
  • Network
  • Search MLS listings
  • Search real estate websites

                                                                                                                           

Do I Need A License To Flip Houses In North Carolina?

There is no need to go through the process of becoming a licensed real estate professional if you want to learn how to flip homes in North Carolina.

Rehabbers and flippers can carry out their exit strategies without a real estate license — as long as they are not acting as a real estate broker or agent. 

                                                                                                                           

How Much Money Do I Need to Start Flipping Houses?

The amount of money you need to start flipping houses depends on several factors, not the least of which include the purchase price of the subject property, the extent of renovations, and the financing used to secure the asset.

Broadly speaking, however, you don’t need any money. You just need access to other people’s money.

How To Flip A House In North Carolina With No Money?

Real estate transactions require capital, but it doesn’t have to be your own. It is possible to flip a house using other people’s money with the following strategies:

  • Private Money Lenders: A private money lender is anyone with excess capital willing to fund your flip. Private lenders are not associated with a financial institution and can be anyone from a family member to an acquaintance. Regardless of where the money comes from, it will coincide with a high-interest rate — anywhere from 6% to 12% (or more). While a lot higher than traditional loans, the interest associated with private money is often worth the price of admission, especially if it helps fund a profitable deal.
  • Hard Money Loans: Hard money loans operate similarly to their private money counterparts. Most of their terms and underwriting are the same, but hard money lenders are a bit more organized, meaning they are more professional than most private money lenders. They are still not associated with any financial institution, but they may exhibit more of a propensity to lend regularly than private money lenders.
  • Wholesaling: Wholesaling real estate is a way for investors to make money without buying a property. The investor signs a contract with the owner, giving the investor the right to buy the property. The investor then sells this right to another buyer for a fee without ever buying the property.

                                                                                                                           

Best Cities To Flip Houses In North Carolina

best cities to flip houses in north Carolina

North Carolina is full of investment opportunities, but the cities listed below look like the best bet for investors:

  • Charlotte: According to ATTOM Data Solutions’ Year-End 2022 U.S. Home Sales Report, 16.8% of Charlotte’s home sales in 2022 involved institutional investors (the third-highest rate in the country). The large investors were drawn toward the city’s relatively affordable housing and strong demand. If the start of 2023 is any indication of what to expect, demand should persist, making Charlotte a great place to invest.
  • Raleigh: Raleigh saw the second-largest median price increase in the country last year (up 17.9%), according to the 2022 Home Sales Report. Raleigh should continue to see plenty of demand despite strong rates of appreciation.
  • Greensboro: No more than an hour and a half drive from Charlotte and due west of Durham, Greensboro has seen its median home value increase as much as 11.1% over the last 12 months. The rapid appreciation rate is most likely the result of people leaving Charlotte for more affordable housing. Consequently, Greensboro’s $228,030 median home value has generated enormous demand and helped investors along the way.
  • Winston-Salem: News of Winston-Salem’s solid real estate market has already spread, as it had the fourth-highest flipping rate in the country as recently as the end of 2022, according to ATTOM Data Solutions’ latest Home Flipping Report. The high flipping rate is likely due to the unique combination of affordable housing and demand.

Read Also: How To Find Off-Market Properties In North Carolina (4 Methods)

                                                                                                                           

Is North Carolina A Good Place To Flip Houses?

North Carolina is a good place to start a flipping business and rehab houses. The state’s relative affordability and demand for North Carolina property creates an investment landscape ripe for investors to capitalize on.

With one in every 3,809 homes falling into foreclosure as recently as March 2023, there appears to be plenty of opportunities to acquire real estate below market value. North Carolina's real estate market has been consistently growing, with a strong demand for housing in many areas. Now may be a good time to learn how to flip houses in North Carolina.

                                                                                                                           

Final Thoughts On Flipping Homes In North Carolina

Flipping houses in North Carolina can be a lucrative venture due to the state’s thriving real estate market and pent-up demand across the entire sector. As a result, now may be as good a time as any to learn how to flip houses in North Carolina.

Nevertheless, investors can’t overlook the importance of due diligence, risk management, and hard work, as these factors are critical to success in any state. Before making investment decisions, thorough research and careful consideration of these aspects are essential. 


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