House Flipping in New Jersey: 7 Best Tips for Successful Flips

Today we'll tell you everything you need to know about house flipping in New Jersey and provide 7 best tips for a successful flip!

Photo by Blake Wheeler on Unsplash

Conduct Market Research

Before diving into the real estate market, we highly recommend conducting research. Study real estate trends, licensing requirements, neighborhood attractions, and average household incomes. Local realtor networks are an excellent place to start since they typically have a wealth of important resources.

Next, we recommend reviewing some current listings and recently sold homes on reliable sites like Zillow. This will give you a good idea of what price ranges work for the areas you're considering.

The average sale price of all types of real estate in New Jersey in August 2023 was $514,000, up 10.5% from the previous year. During that same period, the number of homes sold dropped by 21.1%, and the number of homes for sale fell by 31.0%.

Camden, Westfield, Bridgewater, Freehold, Woodbridge, Sumit, Hillsborough, Princeton, Colony, and Paterson are the ten fastest-growing cities in New Jersey, so these areas may make a great choice for research.

Finally, and most importantly, you need to familiarize yourself with New Jersey laws and licensing requirements for investors. There may be specific laws for investor realtors. While you don't need a license to flip houses, it might be wise to get one. Licensing gives access to various resources that can help you in the real estate market.

Although New Jersey has no specific rules for house flipping, you must obtain a Certificate of Occupancy before selling real estate. You also need to comply with the New Jersey Consumer Fraud Act and the Truth in Consumer Contract, Warranty, and Notice Act. These laws require you to provide honest information to buyers about the property and its condition.

Create a Solid Budget

House flipping can make you a lot of money, but as they say: to make money, you have to spend it. On average, a home renovation can cost between $17,900 and $78,560. This does not include the cost of purchasing real estate or taxes and insurance associated with it.

Therefore, it's important to create a solid budget and stick to it. Your budget should also include contingency funds for unexpected expenses. We recommend following the 70% rule for house flipping. Essentially, you should only pay 70% of the 'after-repair value' of the home minus renovation costs.

Calculation: Purchase Price = After-Repair Value x 0.7 – Renovation Costs

Build a Reliable Team

A team makes the dream come true! Having a reliable team around you is essential for success. There are several professionals you need to have on board. First, a great realtor. A realtor will help you choose property, navigate the market and get the best terms when closing a deal. Here are a few ways you can find a realtor that meets your needs:

If you're already quite familiar with the real estate market, you may not need a realtor.

The next person is a contractor. Having a reliable contractor nearby is essential! After all, they will be responsible for quality and timely renovations. We recommend:

Finally, we recommend investing in a professional photographer and stager. A stager is great for increasing property appeal through proper space styling, while a photographer will take professional photos for online marketing. We recommend checking out local real estate photographers in New Jersey who are familiar with what buyers are looking for in that area.

When choosing a photographer, review their website to ensure their aesthetic aligns with your goals. You can also check online reviews and ask for recommendations from friends and family.

Find the Right Property

How much you'll earn from flipping depends largely on the neighborhood you choose and, of course, the house itself. Homes in unpopular neighborhoods usually don't sell as well as homes in popular neighborhoods.

We also recommend carefully evaluating the condition of the property you're considering and accurately calculating renovation costs. Having a good contractor can save you money in the long run.

Remodel Smartly

Renovation costs can easily spiral out of control if you're not careful. We recommend prioritizing renovations that add value to the home's price. This can be anything that improves the aesthetic appeal of the house or adds new functionality, such as a pool or radiant floor heating.

We recommend avoiding unnecessary renovations like flooring replacement or rewiring. However, this depends on the condition of the house.

If you plan to make major changes or additions to the property, such as a beautiful deck, be sure to obtain proper permits. This includes plumbing, HVAC, and electrical permits.

Remember that the house doesn't have to be pristine. Instead, identify what will be most appealing and work within your budget. Be careful not to overprice your home above market value. Some extra features are great, but they may not suit the neighborhood where your house is located.

Sell Effectively

Once the renovation is complete, you'll need to sell! The best way to ensure that you sell real estate at a profit is to invest in an effective marketing strategy. Working with realtors and social media are great ways to prepare your property for sale.

We also recommend taking professional photos of your real estate to enhance its aesthetic appeal and showcase excellent renovations.

You can advertise your property through social media, online portals, magazine ads or host an open house.

Resell the House

Now that everything is ready, you just need to resell the house!

Flip investors often renovate and sell homes to owners who have access to financing and are willing to pay a premium.

Some investors sell to other investors, both approaches can bring significant profits. We also recommend considering the costs associated with selling, such as appraiser fees, inspection expenses and legal bills. Having a competent realtor and real estate attorney can help with this process, especially if you're just starting out.