Preferred size during home flips

[Daniel D.]

I'm curious to get your thoughts on the size of a home that you prefer to do flips on. I've seen on here that many people like a 3/1 or 3/2 1400-2000 square foot homes. I'm interested to know the reasoning of that. Is it because it's a smaller home, the rehab etc can be done much quicker and the turnaround is fast when selling? As opposed to a 3,000- 4,000 sq ft 5 bedroom/ 4 bath home where the return could be much higher, but risking longer turnaround times.  Is there headaches involved with doing bigger homes? Is it the financing that turns people away from doing them? Curious to hear. Thanks.

[Justin Winn]

I think it really has a lot to do with the market, the turn around time possibly, and investor strategy. But when I see people on TV flip big houses for big profits, all I know is that wouldn’t happen in rural America where I spend most of my time.

Long story short, there are a myriad of different reasons for big, average, or small flips. If you think you can flip a big house and you like the return I think you should go for it. Just make sure your analysis of the deal is well thought out.

best of luck.

[Eliott Elias]

I like to always have 2 bathrooms. The square footage shouldn't delay the project too bad, depending on the extent of work 

[Scott E.]

In my market where I do most of my flips, I start by thinking about what the end buyer is going to be looking for. Most "end user" buyers around here are looking for a 3 bedroom, 2 bathroom, with ~1,800 square feet of living space, so I try to look for deals that already have 3 bedrooms, 2 bathrooms, and about 1,800 square feet of living space.

To me I don't care if the house is 1,000 square feet or 6,000 square feet. Also don't care if it has 3 bedrooms or 6 bedrooms. My process is almost identical regardless. Just need to make sure I'm offering a sellable product in the end.

With that being said, I'm currently doing a couple of luxury deals because the process and effort is about the same as the smaller deals, but the profit is much larger.

[Dan White]

I agree with @Scott E. on this. We don't really care about the size - just on likelihood of resale ARV. We have done 200k condos through 1.2M SFHs. The process is the same and we expect the same profit margin percentage regardless. The turn time for reno is usually quicker for the smaller properties as we can get it to market faster. But that influence our decision...we just add holding time to the larger projects. Hope that helps. We do try and only buy 3 bedroom and up as smaller bedroom count lessens your buyer pool.

[Bob Willis]

Warning: generalities in this post. I believe you need to think about it in this way. What is the sweet spot for the largest segment of the population looking to buy or rent a SFR? I believe it to be couples with children. That being said the average size of most families is 2 adults 2 kids. So... you would prefer three bedrooms and two baths. Now of course there are larger families, and there are families that are comprised of only a couple. That being said even those other family sizes could conceivably use a 3br 2ba house. But how many families comprised of just a couple are going to want 4br or more, or how many larger families are going to want only 2br. So the 3br 2ba fits the largest demographic, and I am willing to bet there are studies out there backing that up. Just a guess

[Will Barnard]

There really is no such thing as a sweep spot across the board as far as size of homes goes for best flips. It is largely dependent on a number of things like investor experience level, amount of capital the investor has access to, local market conditions, what the competition has for sale, etc.

Back to generally speaking, it is fact that going from a 2 bed to a 3 bed home can dramatically increase value, same goes for going from 1 bath to 2. It is much less of an impact when you go from 3 beds to 4 and even less from 4-5. Same with baths. As the quantity gets higher, the added value goes down. Square footage certainly factors into values of course, especially when one uses an average price per SF comparison of comps.

What is best for you can only be determined by you and your study of your specific market. Don't spend so much time thinking about what other investors do  in other areas, look for what is selling in your market and at what price points along with level of finishes. These have a profound impact on what you should be looking for in a flip opportunity.

[Lisa Wright]

I'd love to see a few investors come in and reno a block where half of the homes are wrecked.  I showed a home just a few blocks over from Boston Edison and would love to see this happen.