According to ATTOM Data Solutions’ latest Home Flipping Report, rehabbers across the country managed to average a 25% return on investment (ROI) as recently as the end of 2022, or a gross-flipping profit of about $62,000 per deal. Perhaps even more importantly, few states award investors the same opportunity to realize flipping profits like Ohio.
The Buckeye State combines the lucrative potential of rehabbing with the one thing investors need to capitalize on more opportunities: a relatively high foreclosure rate.
If you want to see what the housing market has in store for the real estate investing community in 2023, there’s no better time to learn how to flip houses in Ohio.
This guide will teach you everything you need to know, including:
House flipping, otherwise known as rehabbing, is one of today’s most popular investment strategies in the real estate sector.
Not surprisingly, house flipping involves buying a property below its market value (preferably in need of repairs or renovations), making the necessary improvements, and selling (flipping) the updated asset to a buyer for potential profits.
House flipping has already proven to be a lucrative investment strategy in every state, and Ohio is no exception. That said, Ohio real estate investors may have an advantage over their counterparts in most other states. Ohio’s relatively high distribution of foreclosures presents local real estate investors with more opportunities to capitalize on.
According to ATTOM Data Solutions’ Year-End 2022 U.S. Foreclosure Market Report, Ohio had the fifth-highest number of foreclosure filings throughout 2022. Trailing only California, Texas, Florida, and Illinois, The Buckeye State saw the foreclosure process begin on 13,469 properties. Despite having the fifth-highest foreclosure filings, Ohio had the fourth-highest foreclosure rate.
Today, foreclosure filings are improving, but the state still has a high distribution of distressed homes. According to SoFi, Ohio’s 1,616 foreclosure filings in February were enough to give it the eighth-highest foreclosure rate in the country.
The Ohio real estate market’s high distribution of foreclosures presents plenty of opportunities for investors. As a result, there may be no better time to learn how to flip houses in Ohio than now. To fast-track your education, try following the seven steps outlined below:
While not a requirement, investors learning how to flip houses in Ohio should try to find a mentor. Working alongside someone who knows what they are doing, or even just learning from an industry veteran, can significantly lower the barrier to entry.
With a house-flipping mentor on your side, you may be able to simultaneously:
In addition to finding a mentor, aspiring real estate investors in Ohio should take every opportunity they have to learn as much as they can about the local market and all of its indicators.
To get you started, here’s a list of some trusted resources to research the Ohio housing market:
New investors, and those learning how to flip houses in Ohio, should use the 70% rule to start analyzing their fixer-upper. While far from perfect, the 70% rule rewards new investors with a rough approximation of how much they can spend on a home and still make money.
To use the 70% rule, you’ll need at least two variables: the home’s after-repair value (ARV) and how much money you expect to spend on renovations (materials and labor). The ARV is the estimated value of the home after it is updated. The easiest way to calculate the ARV is to check nearby “comps.” In other words, find out how much similar models have sold for in the last few months. The rehab budget, on the other hand, will require a scope of work detailing all the improvements that need to take place.
Once you have those two variables, take the ARV, multiply it by .70 (or 70%), and subtract the amount you budget for repairs. The resulting number is the maximum allowable offer (MAO), or how much you can spend on the home and still make a profit.
Read Also: Estimating Rehab Costs: (Ultimate) Investor's Guide
Anyone learning how to flip houses in Ohio will realize they don’t need to use their own money. Instead, plenty of other investors are ready and willing to invest their capital in flippers — as long as they get a return on their investment. That said, here are some of the most common ways to raise money for a flip:
Once funds are secured, it’s time to make an offer and sign a purchase and sale agreement. The agreement is a binding contract that sets the terms of the impending deal, including:
As an escrow state, an escrow company will step in once the agreement is signed. The third-party escrow company is responsible for overseeing the process. In doing so, the escrow company will order a title search, confirm the home price, request an inspection, have the appropriate documents signed, and collect funds.
The escrow company will make sure the terms are met and complied with. If each side lives up to its end of the bargain, the escrow company will distribute the funds and keys accordingly. The closing documents will be sent to the county Recorder’s Office and serve as the official title record.
House flippers should have already created a scope of work detailing the necessary improvements. Initially, the scope of work compliments the deal analysis when determining the maximum allowable offer. At this stage of the process, however, the scope of work is more of a step-by-step blueprint to follow. Use the scope of work and research nearby comps to improve the house and get it ready to sell.
According to Remodeling Magazine, some of the best improvements Ohio real estate investors can make include, but aren’t limited to:
The idea isn’t to make the most expensive upgrades. Instead, the idea is to make the improvements with the highest ROI that attract the most homebuyers the first time.
Investors must place the home up for sale immediately — if not sooner. The faster the home sells, the better. Every day that passes incurs more costs, not the least of which include property taxes, utility bills, general holding costs, and more expenses.
To sell the house as fast as possible, consider enlisting the services of a staging company and a qualified real estate agent. While both will cost more upfront, the return on investment could be worthwhile. Independently, stagers and real estate agents can help homes sell for more money in less time. Together, the benefits compound and expedite the process.
Read Also: What Is Home Staging And How Can I Use It?
To find houses to flip in Ohio, start your search at the following locations:
No, you do not need a real estate license to flip houses in Ohio. Investors are free to carry out their rehabbing exit strategies across the entire state without becoming licensed professionals. It is worth noting, however, that unlicensed investors may not act as real estate agents or brokers.
While you do not need a license to flip homes in Ohio, you may benefit from having one. You can gain access to the MLS, network with like-minded professionals, and even avoid paying real estate commissions if you are licensed.
Flipping real estate in Ohio requires capital. However, nobody ever said the money used to buy a house has to be your own. It is possible to secure and fund a deal with the help of these flip loans:
Read Also: Private Money Lenders: The (ULTIMATE) Guide
Ohio’s relatively high foreclosure rate has created flipping opportunities across the entire state. However, the following cities appear to have the most potential for Ohio home flippers:
Ohio property investing is growing more popular with each passing day. As more people look for supplemental income in an uncertain economy, real estate is receiving a lot of deserved attention. If for nothing else, median gross flipping profits typically eclipse those of today’s most popular investment strategies.
Those who learn how to flip houses in Ohio may have a unique advantage. With one of the highest foreclosure rates in the country, Ohio real estate investors may use the steps outlined in this ultimate guide to capitalizing on more opportunities than many of their out-of-state counterparts.
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