Rehabs and Flips in Utah

[Jeremy Stringham]

My wife and I built our home in Utah in 2014. Bought the land for $94k built our home for $200k subbing it out ourselves and it recently appraised for $475k. We have some time now to get more involved in real estate. We will soon have $650k we would like to use to start and get better deals using cash. Would you recommend staying with homes similar in value to our own as we did a couple of years ago? Or smaller homes and do more volume? Any references to agent's who specialize in flipping in Utah? I am an insurance agent so I deal with a lot of real estate agents but am looking only for those that specialize in flips and rehabs. 

[Becca Summers]

@Jeremy Stringham Those are some great numbers. What you did would be what builders do which is build a home that most buyers are interested in and then selling it right before or after completion.  It's considered building a spec home. You will notice that most builders don't build spec homes much higher than $450,000 because that market of buyer is more particular. There is a lot of risk in building spec homes because of how long they take to build but the reward can be great. I've seen a lot of builder sell their spec homes for more than the same home it would cost to build just because the buyers aren't willing to wait.

You will find the construction costs have gone up quite a bit since 2014 because subcontractors have a lot of work and are charging a lot more. Which in turn raises the purchase price. The rule for building like you did is you don't want your lot to be more than a 3rd of the total cost, so keep that in mind if this is a route you want to go. 

I've worked with flippers over the years and most I've worked with like to do smaller homes with the ARV between $225-$300. That is the price point of first time home buyers who want nice newer homes but can't afford new construction. I don't see many high end flips and when I do see them they tend to be in areas where there is no new construction going on for the same price.

The average purchase price in Davis County was $274,000 last month. If you can stay under that number you'll be safer with a larger buying pool.