In fix-and-flip investing, there are so many critical factors that can impact your project ROI. The price and condition of the property, the scope and scale of your renovations, your access to reasonably priced materials, the skill and speed of your contractors, and the attention and response times of your real estate agents--just to name a few. If you are a successful investor, your fix-and-flip business plan is probably already taking into account all of these factors--but are you also taking into account the time of year your house flips are hitting the market, and the impact that can have on your ROI?
What does the home buyer data reveal?
According to the real estate data experts at ATTOM data solutions, a home buyer's ultimate decision to shop for and purchase a new home is significantly impacted by the calendar. In fact, home sellers should be aware that they can potentially net thousands of dollars more for their property if they sell during the peak month of June, as opposed to the two slowest months of the year, October and December.
ATTOM compared median home value to actual sale price by month and found the months returning the greatest seller premiums were:
June - 9.2 %
May - 7.4 %
July - 7.3 %
April - 6.4 %
March - 6.1 %
August - 5.8 %
February - 5.6 %
September - 4.7 %
November - 4.0 %
January - 3.7 %
October - 3.3 %
December - 3.3 %
Or, to look at the data another way:
June is the hottest month for home sales
June tends to be the best month of the year for home sales, with seller premiums at their peak. By September the seller premium drops by half. With parents of school-age kids looking to be settled in to their new home by the time the new school year begins in late August/early September, and with the time constraints of the busy holiday season, home buying tends to go on the back burner during the latter part of the year. This is particularly true in December when people are travelling for the holidays or are busy with holiday events--and when the weather in some parts of the country serves as a major deterrent to house hunting.
For these reasons, as you are planning your fix-and-flip property purchase and mapping out your construction calendar, keep in mind what time of the year your renovations will be complete, and what month your fix-and-flip property will be ready to hit the market.
Also, if you currently have a property on the market, and you haven't received much interest from home buyers yet, don't panic . Keep in mind that this time of year can be extremely slow, comparatively speaking. Assuming you have strategically upgraded and renovated your property and priced it to compete with local comps, you should be getting more interest from buyers in early spring when the weather heats up and the days are longer--affording buyers who work until 5pm more daylight to get out and attend open houses.
Of course, the ATTOM data cited above is a national snapshot which more than anything else provides another important lens for fix-and-flip investors to use when planning their project calendars.
Homes do sell year round
Houses do sell every day of the year, so it would be incorrect to assume you absolutely cannot sell your fix-and-flip property during the "off season." In fact, although it tends to be much easier to find buyers in the spring and summer months nationwide, if you are operating in a part of the country where winter weather is less extreme, and there is both figurative and literal "heat" in your market during fall and winter, buyers should be eager to see what you have to offer.
For more possible issues you may need to address when selling your fix-and-flip investment property, read our blog post "My House Flip Isn’t Selling: Now What?"