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12 min read Nov 28, 2022

Flipping Houses in Rhode Island: Here’s What You Need To Know

flipping houses in ri

10% of all homes sold in the US are flips. The real estate market has slowed significantly, but you can still make a hefty profit by flipping houses in Rhode Island the right way!

What is House Flipping?

Flipping or house flipping is a business strategy where an investor buys a property, fixes it up, and resells it at a profit. The idea behind flipping houses in Rhode Island is a short-term investment with high gains for the person who buys it.

The buyer does not use the property, but simply renovates and sells it quickly.

Investors look for distressed properties to fix and flip. These are the properties the owners want to sell without any changes, are up for auction, or are pending foreclosure. Such factors make properties an asset for home flippers.

» How to Flip a House: The ultimate guide you need!

Pros and Cons of Flipping Houses in Rhode Island

Factors✅ Pros❌ Cons
💰 ProfitsGreat profits with each fix & flip project. Lawsuits of houses with title issues can incur losses.
👨‍💼AutonomyFull control as the owner. You decide the time, effort, and budget of the whole process.Flipping can be financially draining and risky when carried out alone.
🏠 Home ValuesYou may improve the home values in the neighborhood with proper renovation.Unforeseen defects in the property can affect the home value.
🌐Market ExposureGood exposure in the real estate market.Requires in-depth understanding of the real estate market which can be exhausting.

» Pros and Cons of Flipping Houses: Learn about the advantages and disadvantages of flipping houses.

How Long Does It Take to Flip a House in Rhode Island?

The average time to flip a house is 162 days. However, some flipped houses stay on the market for more than 202 days as well!

Choosing a good location influences how long it takes to flip a house. Currently, cities like Jacksonville, Phoenix, Seattle, Tampa, and Charlotte are the hottest markets for real estate flipping.

How Much Does It Cost to Flip a House in Rhode Island?

A seller pays 10% of the purchase price for the overall fix and flip process. The overall costs include purchase costs, repairs, contractors, electricians, plumbers, real estate professionals, etc. Here are some costs that you should take care of as part of the house flip:

  • Home Purchase Costs
  • Costs for Fixes
  • Property Taxes
  • Utility Cost
  • Costs for Re-selling the House
  • Closing Costs

Can I Flip Houses With No Money in Rhode Island?

Yes, you can start flipping a house in Rhode Island with no money. 37.3% of the flipped houses were purchased with the help of external funding. Many lenders look at real estate flipping as an investment opportunity and therefore help house flippers buy properties at an interest.

If you wish to ask for a loan, then you should know the various types of ways to flip a house without money, here are some of them:

  • Private Money Lenders
  • Hard Money Lenders
  • Wholesaling
  • CrowdFunding

» How to Flip Houses With No Money: Here’s the detailed guide on how to start a house flipping with no money.

Is Flipping Houses Profitable in Rhode Island?

Yes, it is profitable if the entire process is thoroughly planned and executed. Many home flippers saw an increase in profits after 2020. Most people get into house flipping because of the profits involved. Home flippers in Rhode Island can also use real estate websites that provide advanced tools for a fast and hassle-free sale.

As a beginner, you may lose a lot of money because of the extra repairs, unforeseen problems, etc. But, it is a profitable career once you learn the tricks of the trade. House flippers can save on commissions by listing their fixer-upper using Flat Fee MLS listing services.

Flipping 101: Steps for the Smart House Flipper

Your property can be 1 of the 10 houses successfully flipped in 2022. Have a look at the detailed house-flipping checklist that will help you do it right. Here’s a checklist for flipping a house that covers each step of the fix and flips process:

1. Research Thoroughly

Research and analysis are essential for selecting a property. People can identify the right housing market for home flippers through a good search. It will help the investors to fix an appropriate purchase price and determine if a loan is required. A good plan guarantees a smooth house-flipping process.

2. Analyze Expenses

Calculate the amount required to buy and fix the house. The final costs should include every expense from fixing to selling the house. A beginner must also set aside funds for emergencies in case of unplanned expenses.

3. Fund the Flip

Having the money to fix and flip is crucial to the process. It is essential to finalize a source of funding at the beginning to ensure smooth acquisition and repair work. If there is a shortage of funds, then a lender can cover for you.

4. Buy the House

90% of home buyers found their properties online! After securing the finances, a buyer can acquire the property. Using the 70% rule can help you greatly to purchase a house at an ideal price. According to the rule, you should pay only 70% of the After Repair Value (ARV) excluding the rehab costs during purchase.

If a home’s After Repair Value is $500,000 and with $30,000 repair costs, then the 70% rule means that an investor should pay no more than $320,000 for the home. Look at the calculation given below:

    ✍️ The Home Flipper’s 70% Rule

    Many home flippers swear by the 70% Rule. The rule states that you should only pay 70% of the After Repair Value of the home, minus the rehab costs.

    70% Rule Formula: Your Purchase Price = After Repair Value x 0.70 – Rehab Costs



    Let’s take an example. How much should you pay for a home that you expect to sell for $500,000. Let’s assume the rehab cost estimate is $30,000.

    Your Purchase Price = $500,000 x 0.70 – $30,000 = $320,000

» How to Buy a House: Everything you need before buying a house in the US.

5. Supervise The Work

You must have all the right information to ensure each step is being carried out on time. Maintaining a good rapport with real estate agents, contractors, electricians, plumbers, painters, etc. can expedite the fix-up process. Beginners may struggle initially to network with people but should learn to manage people if they wish to continue house flipping.

6. Market The House

Marketing the property is as crucial as fixing the home. A thorough marketing strategy can help the flipper get maximum exposure to find an ideal buyer fast. A house flipper can promote and sell a house without a realtor or hire a real estate professional for guidance.

» Sell Your House Without a Realtor: More and more Americans are selling houses without a Realtor. Click to know why!

7. Sell the House

Selling a house can be time-consuming and difficult if the seller does not have the experience. Usually, a Realtor is a right person to help you find buyers since they are experts in the field. But with Houzeo, flippers can get access to the MLS at a Flat Fee making the real estate transaction effortless.

Why Choose Flat Fee MLS?

  • Gives access to the MLS for maximum exposure.
  • Availble at a Flat Fee that stays within your budget.
  • Advanced online tools that give you everything in one place.

Houzeo has it all! Start Your FREE Listing NOW!

 

How to Sell Your House – Resources for House Flippers in Rhode Island

Sell A House By Owner

If you want to sell a house FSBO, list on MLS using Flat Fee MLS listing services. This way you save more money at the end of the house flip.

You need to take care of important factors when you sell your house as an owner. These include decluttering, repairs, staging, and most importantly marketing.

» How To Sell A House By Owner: Know about the Ins and Outs of Selling a House.

Sell Your House Fast

One of the best ways to sell your house fast for cash is by selling to cash home buyers. Maximizing your profit is as important as selling the house quickly.

» How to Sell My House Fast: Know How to Sell Your House Fast and for the Most Cash!

Disclosures

A disclosure statement is a form that details the condition of the property. It’s the home flipper’s responsibility to disclose property defects that affect the value of the house.

Here are the disclosure forms you need to fill out if you are selling a property:

  • Seller’s Disclosure Form
  • Lead Paint Disclosure (for houses built before 1978)

» Seller’s Disclosure: Read to Know How to Ace Your Disclosure Process.

Closing Costs for Sellers

A home seller typically pays around 1.0% of the home’s final sale price as closing costs. Additionally, every state has its own set of taxes.

But do not worry, you can calculate the approximate seller’s closing costs with Houzeo’s Advanced Closing Cost Calculator.

» Closing Costs: Be Prepared for the Closing!

🏡Maximize Your Profits By Using Flat Fee MLS



Save thousands in commissions by selling your flip via Houzeo.

Start Your FREE Listing NOW!

 

House Flipping Mistakes to Avoid

1. Not Planning Thoroughly

A flip cannot be successful without proper planning and execution. Beginners may not anticipate the risks of flipping due to their lack of experience. So, it is vital to research and network with people who are experienced.

2. Not Having Enough Money

Not arranging enough funds is one of the biggest mistakes you can make as a beginner. During the fixing, there are bound to be more expenses than you predicted. Therefore, it is necessary to have extra funds that can help in times of crisis.

3. Not Assessing the House Before Purchase

Buying a distressed property with severe damages will increase your work and take more time to fix. A house needs to be thoroughly inspected before purchase so that you buy a home that can be repaired fixed and flipped fast. A distressed property is an asset only if there are fewer repairs.

» Home Inspections: Click to know why a home inspection is absolutely necessary before buying a house.

4. Not Investing in a Good Team

If your team of real estate professionals, contractors, plumbers, and other individuals are inexperienced and do not coordinate with you, it won’t be easy to complete the fix and flip. Investing in a team of experienced professionals can expedite the fix-up process and can work with you in the future too.

Alternatives to Flipping Houses in Rhode Island

1. Sell with Flat Fee MLS Companies

The company will list your home on the MLS on your behalf for a flat fee. Save thousands of dollars on the average real estate agent commission while listing your home.

» Flat Fee MLS: Check out our rankings for the best Flat Fee MLS Listing Services in the US.

2. Sell with Discount Real Estate Brokers

Discount Brokers are licensed real estate professionals or companies that help you sell your house at a low commission or flat rate. Most discount brokers charge a fixed fee or commission of less than 2% for the entire process.

Want to sell with discount real estate brokers? Here are our top recommendations:

Discount BrokersFees
Redfin1.5% of the sale price
Ideal Agent2% of the sale price
UpNest2.5% of the sale price

» Discount Real Estate BrokersWe’ve ranked the top discount brokers in the US.

3. Sell “For Sale By Owner”

77% of the FSBO sellers sold their houses in 2 weeks. FSBO websites like Houzeo help you sell your home fast and make a successful sale without any hassle. The best part about choosing FSBO is the freedom to make decisions without the intervention of a real estate agent.

» For Sale By Owner WebsitesCheck out our rankings of the best For Sale By Owner Websites in America.

4. Sell to “We Buy Houses for Cash” Companies

A home seller who sells their home to a cash company can get 50% – 70% of the property’s market value be it a distressed property or not. You can also try selling a house as-is to save money and directly sell to a cash company.

» Companies That Buy Houses for Cash: Check our rankings of the Best Cash Companies in the US!

5. Sell to iBuyers

iBuyers are companies that buy houses for cash instantly. The price is decided with the help of their proprietary algorithm, recent real estate data, and their in-house experts.

» iBuyer Reviews: See who’s No.1 in America!

6. Sell with Real Estate Professionals

Listing and selling a home with a real estate professional is stress-free. Experienced real estate brokers can quickly sell a home with the relevant market information.

» Best Realtors: Sell your house with the top REALTORS in the US!

What is Houzeo?

An overview of what the platform is all about

Start Your FREE Listing NOW!

Is House Flipping Worth It?

Real estate flipping in Rhode Island is a popular business strategy in the US. While it helps the owners to let go of their distressed properties, making profits is a crucial factor in the process. You can ask for help from a Realtor to get through the whole flipping process or use a platform like Houzeo to save on Realtor commissions.

» Houzeo reviews: 7 things you should know about Houzeo before you list your home.

Frequently Asked Questions

1. How to flip houses with no money in Rhode Island?

An individual need not invest their own money in the flipping business. A potential house flipper can get money through other sources such as hard money lenders, private investors, wholesalers, flipping investors, home equity, and crowdfunding.

2. What type of loan is best for flipping a house in Rhode Island?

Since house flipping is a short-term project, it is recommended not to apply for long-term loans. Some forms of short-term loans include private lenders, cash-out refinances, and home equity lines of credit.

3. What is the 70% rule in house flipping?

The 70% rule is for home flippers to determine the maximum price they should pay for a property. The purpose of the rule is that they should spend no more than 70% of the home's after-repair value minus the costs of repairing the property.

Also Read

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