Know Your Buyer: Virginia REI Case Study
There are many strategies that real estate investors can use to be successful and make a profit. Keeping a strong focus on the intended buyer’s needs and wants is one of the most reliable of these strategies. As long as you know the area’s demographics and the lifestyle of the typical buyer in the property’s specific neighborhood, you can use this buyer-focused strategy to create the perfect house for resale. One of our very successful house flippers uses this strategy in northern Virginia. Here’s his story.
Meet Jason: Successful Real Estate Investor
Jason Williams is a successful house flipper who now has 8 property flips under his belt. While Jason’s background and day job are in finance, he’s passionate about house flipping and considers it an “intense hobby” -- real estate investing doesn’t lend itself to casual participation!
In contrast to his less “hands-on” day job, house flipping provides a real, tangible product for his effort. He enjoys seeing his hard work and planning turn into a beautiful property that he can sell for a profit. Physically seeing the product of his work is rewarding in a way that he doesn’t get from his main occupation.
Having passion isn’t just a great way to enjoy a hobby, it’s also a powerful motivator to get into a new career. Jason’s goal is to eventually become a full time real estate mogul, building a company that not only flips residential properties but also rehabs commercial spaces and even develops raw land. He has a great support system in place to accomplish this already, as his wife is a real estate broker and agent who loves the industry too. Jason’s wife and her network are a great help with the transactional details involved in turning over properties for profit. She’s even been looking into taking on her own flipping projects alongside Jason’s. Jason enjoys having a strong synergy with his partner and sharing his success with his family.
As a start down the path of owning his own real estate company, Jason spoke with Rehab Financial Group’s Susan Naftulin on building his company and her advice on how to grow. With her advice, Jason now has an entity that he uses for all his real estate dealings.
Jason’s Unique House Flipping Strategy
Northern Virginia is a very competitive market for any buyer, including investors. High property values and a strong seller’s market mean there is a low inventory of foreclosures and short sales. Even when there are properties in financial distress, there will be a line of investors waiting to bid the selling price up, which translates to a slimmer profit margin for house flippers. This is the situation in a lot of metro areas where there is a strong job market. That doesn’t mean there isn’t a way to take advantage of the strong market though. Knowing the intended buyer is Jason’s key strategy to overcome this challenge.
Jason has found that a great way to find properties to flip in this highly competitive area is to search for under-built homes in highly desired locations and tailor it to the buyers. Zeroing in on properties within walking distance to the DC Metro or other public transportation is buyer gold in a city with horrendous traffic. Waiting for the right property in these locations that can be vastly improved without out-pricing the neighborhood has been a very successful strategy for him.
Case Study Property: Alexandria, VA
Knowing the DC Metro/Northern Virginia buyer is how Jason amplifies his success. The typical buyer is a small family who wants a reasonably sized house not too far from downtown DC. As mentioned, proximity to the metro is a huge value-add but he also knows that these people want a family friendly outdoor space and a lively local scene of shops and restaurants. Lastly, a highly visible feature that buyers are desperate for in this area is a fence! Fencing the backyard has a huge ROI because of the area’s dog friendly nature.
Jason found a property within two blocks of a Metro stop that, although certainly livable, needed some updates to match the neighborhood’s upward price trajectory. Taking on the project from another flipper in his network who didn’t feel like it was the right project for him, Jason felt confident that he could make a highly desirable home out of this outdated property.
Comps in the neighborhood had recently sold for almost $200K more than Jason’s purchase price, making it an easy decision. By researching the features and specs of comp homes, Jason says he literally “mimicked” the highest priced house so that he could ask for a similar selling price. The strategy worked. Jason easily found a small military family to purchase the home for a significant profit. They appreciated, and were willing to pay for, the rehabbed backyard, modern styling, and local attractions of the property. Landscaping is huge value add - in this type of neighborhood “fences matter” because lots of people have pets.
- Two blocks from metro
- New businesses in walking distance being built
- New dormers added headspace and modern feel to smaller rooms
Features Mimicked from Comp House:
- Dormers on front of house
- Shed dormers for bathroom in the back
- Support beam for Open Floor Plan
- Fenced backyard
Jason continues to build his team and network as his business grows. While he has a great network of agents through his wife and a reliable team of contractors from completing so many flips, he continues to look for stronger relationships with inspectors and appraisers.
REI Tips from Jason:
- Do your homework on the community.
- Look for features OUTSIDE of the house. Everything on the periphery adds value to the property -- just as much as fixtures, tiles, and flooring.
- Do big projects first to stay on budget like plumbing, electrical, and foundation work. Smaller projects are easier to adjust.
- Don’t be greedy. Jason could have increased the purchase price even more by digging out a basement to match the comp house, but that project would have added time and complication to the project that he didn’t find worth his effort. By skipping that option, he can move onto the next profitable property that’s more within his comfort zone.