The Ultimate Guide to Flipping Houses in The Greater Seattle Region

The Ultimate Guide to Flipping Houses in The Greater Seattle Region

The Seattle-area market offers a promising landscape for savvy real estate investors. Whether you want to invest in buy-and-hold properties you can rent to local residents or you want to start flipping houses and selling them for a substantial profit, Connie Sorensen will help you find active listings that fit within your search parameters and can be a great addition to your investment portfolio. Start your journey by learning more about the recent market trends affecting the Seattle area, best practices for finding potential flips, and how hiring a realtor can help strengthen your business operations.

A quick look at the 2023 Seattle-Tacoma-Bellevue real estate market

The larger Seattle-Tacoma-Bellevue market is a thriving real estate region. Because of Seattle's prominence in the tech industry, tens of thousands of professionals are moving into the area, leading to a strong demand for rental homes and move-in-ready houses. As of the beginning of 2023, homes in this market were sold for a median price of $699,300, with a $144,900 equity gain over the past three years. This indicates a strong and growing market where investors may have to put forward a high initial investment but can also gain a high ROI. Despite the market correction at the beginning of the year, Seattle-area demand continues to offer a great environment for investors.

In fact, the recent slowdown in housing prices may represent an opportunity for savvy investors. Q1 2023 saw a 6.3% decline in annual appreciation, and Q2 2023 saw a 3.1% depreciation in median home price. Investors focused on flips, or older or distressed properties that can be purchased at a discount, can purchase homes during the downswing and prepare them for future markets.

How to find the right properties to flip

No matter the state of the market, it's incredibly important to choose the right properties, especially if you're flipping houses. Every home must be purchased at the right price so you can make enough return off the sale to cover renovation costs, transaction costs, and paying yourself. In 2022, the average ROI for house flipping was 26.9%, and this is the number to beat to keep your operations on the right track.

If you're new to the house-flipping industry, it's even more important to find exactly the right property. Established flippers may make the occasional investment that turns a slight loss or doesn't perform well enough; this cost can be absorbed by a big enough portfolio. Experienced flippers are also familiar with complex repairs, so they can more easily handle severely distressed properties. But when you're just getting started, finding a home with mild to moderate renovation needs and a solid margin of profitability is crucial for building a strong foundation for your business. Follow these three steps to find good properties for flipping in West Seattle.

1. Work with a local realtor

The sooner you partner with an experienced local realtor, the faster you can start finding, researching, and assessing properties. Realtors have access to the Multiple Listing Service (MLS) for the region, which serves as a large database for all of the properties on the market. Through this database, realtors can set you up with a custom home search program that identifies properties with the right pricing, location, and other parameters to fit your search.

Realtors can also arrange showings of properties, give you insight into developing market conditions, and even refer you to different lenders and general contractors for every step of the flipping process. Even better, when you're buying a property, the seller typically pays for your agent's commission.

2. Adapt the 70% rule to your unique market

The 70% rule is a strategic rule of thumb for determining conservative offer prices on properties you want to flip. To use this rule, calculate the approximate value of the property after repairs. Subtract the anticipated repair costs, and then multiply that number by 70%. This is the offer you should make, as that 30% difference gives you room for unanticipated repairs and paying yourself.

However, every market is slightly different. You might adapt it to a 75% rule, especially if you only look at homes without structural repair needs. You might also ask your realtor for neighborhood comps and data so you can pinpoint that 70% price with more specificity.

3. Be cautious of big projects

Homes that need significant upgrades can represent an opportunity to make large profits. This is because both traditional homebuyers and new flippers might be wary of investing in a property. Buyers might not even have access to it if a conventional lender won't approve it. If you have the capital and expertise to tackle these big problems, you have an opportunity to buy great properties with minimal competition.

However, it still pays to be cautious. Whether you're new to flipping or new to the area, it may be best to slowly ramp up the difficulty of each home.

How to analyze deals around West Seattle

As an investor, you need to develop your own process for analyzing deals. From the start, it can help to involve your realtor, lender, and financial advisor in the process. While the decision is ultimately yours, these professionals can advise you on the potential after-repair price of the home, your access to loans based on property particulars, and the extent to which you can leverage your own assets to purchase investment properties.

As you start, make sure these two steps are built into your decision-making process.

Get the details on comparable properties when buying

This is where working with a realtor early in the process can be very valuable. Realtors can generate reports about specific neighborhoods, the historical performance of homes in a certain area, and the current prices of comparable before-repair and after-repair homes. This data will give you more insight into whether an offer price is fair and if you stand a good chance of hitting your target sale price in the future.

Build your pricing schema around property particulars when selling

When you're repairing and selling a home, there are a lot of different tactics you can use to calculate and set a fair sales price. Some best practices to keep in mind are:

  • Choose premium materials to align with Seattle-area demand.
  • Make them approachable and winterized for out-of-state buyers.
  • Invest in comprehensive but cost-effective smart home features.
  • Learn about FHA guidelines. More and more buyers are using FHA loans, but these loans have strict requirements regarding the purchase of flipped properties.

Find the right properties for flipping houses in West Seattle with Connie Sorensen

Flipping houses can be a very rewarding style of real estate investment, especially if you have the right team of professionals helping you. Connie Sorensen is an experienced local realtor with years of experience helping families and investors find properties throughout the area. Reach out today to arrange a consultation and start building your flipping processes with more real estate insights.

*Header photo courtesy of Connie Sorensen


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