If you are looking for a comprehensive guide to start flipping houses in the state of Maine, you’ve come to the right place.
Flipping houses is one of the most basic ways to begin investing in real estate. It might be a profitable business venture. However, because this is a high-risk investment, you must consider a number of things.
But don’t worry, I’m here to assist you with your studies and judgments. This comprehensive guide deconstructs market research, evaluation, and strategy for flipping houses in Maine.
Flipping Houses in Maine
Maine has one of the country’s hottest housing markets. It’s a once-in-a-lifetime opportunity for house flippers to make money. Despite the low property market valuation, investors who select the right properties and flip houses in Maine profit handsomely.
Maine houses are no exception to the concept that any investment, including real estate, is highly specialty and location based. Paying attention to current market happenings and understanding how to respond quickly will help you determine whether or not you made a profit. You should always work with a local professional real estate agent to understand the trends in these local markets and find investment possibilities. Their in-depth knowledge of these unique property markets may be beneficial.
Analyzing the Maine Housing Market in 2022
Maine is the 24th most affordable housing market in the US. Maine’s average house value is $355,407 as of April 2022, which is just above the national average home value of $344,000. Furthermore, house values in Maine climbed by a little more than 12.85 percent in 2021, and are expected to rise by a stunning 20.2% in 2022. These prices, on the other hand, vary even within the state, indicating how regional and localized property markets are.
Maine’s real estate market trend has drawn real estate investors from all around the country. Maine houses are in more demand than they are available. This has resulted in a strong seller’s market in Maine’s housing market. It’s easy to understand why investors are flocking to the Maine real estate market. Two of the most important drivers of growth are the expanding population and the improving employment and education sectors. Maine has a high school graduation rate of 92.3 percent and a median family income of $56,000.
Furthermore, Maine’s low-cost housing market makes properties more accessible to first-time homebuyers and investors. You’ll need less money to get started, which means there will be more novice investors and, as a result, more competition in the future.
How to know if the house in Maine is a good investment?
After researching Maine’s housing market and economy in general, you’ll most likely want to narrow your search to a specific location and community. Remember that not every local real estate market offers the same kind of investing options.
In general, a number of criteria are considered when determining whether or not a property is a suitable investment. Avoid local marketplaces with a lot of goods and postings that have been active for a long period while you’re just getting started. For example, suppose properties in a certain neighborhood sell after an average of 30 days on the market. And if you come across a listing for a house that is still active after 40 days, it is typically a no-go.
Another clue that a home in Maine is a smart investment is if its price is lower than the local market average. One of the simplest methods to uncover potential value is to look for residences that are much less expensive than previous sales in the area. Keep in mind that the less costly residences will require far more adjustments than the more expensive ones.
How much should I pay for a house in Maine?
When selecting how much to spend on a house in Maine, it’s typically a good idea to stick to the 70 percent rule. This rule states that you should never spend more than 70% of the house’s after-repair value, minus repair and remodeling costs. Assume you purchase a property in Maine and intend to spend $30,000 on repairs and upgrading. Keep in mind that improvements increase the property’s market value. Let’s assume that your home is worth $400,000 after repairs.
According to the 70 percent rule, you shouldn’t have spent more than 70% of the after-repair value minus repair expenditures on this property. When you add up the numbers, it only amounts to $250,000.
It’s critical to keep in mind that the 70% rule is discretionary. It’s only an estimate of the house’s genuine worth. This rule aims to create a profit margin that is substantial enough to pay all other costs while flipping houses in Maine while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in Maine?
To flip houses in Maine, you need not need a real estate license. If you want to start flipping houses in Maine full-time, getting both a realtor and a contractor’s license is usually a good idea.
If you don’t want to deal with the challenges of acquiring a real estate or contractor’s license in Maine, that’s OK. In this instance, I strongly advise you to engage with a seasoned realtor and contractor with whom you can develop a positive working relationship.
Finally, if you are new to Maine, it may be difficult to find a trustworthy contractor or repairman. Furthermore, zoning restrictions and standards vary by city, and market trends shift often. Working with a professional agency or contractor may assist you in anticipating problems.
How to start flipping houses in Maine and make a profit?
You’re ready to begin your home flipping journey in Maine once you’ve done comprehensive research on the Maine property market and are confident that the house is a good investment. Follow these six steps to begin flipping houses in Maine and benefit handsomely from this type of real estate investing.
1. Create a Budget and Secure Financing
The first thing to consider when flipping properties in Maine is your financial situation. Before looking at potential qualities, it’s typically a good idea to perform the math.
You should already know how much money you have if you have cash on hand. You may avoid financing charges, mortgage payments, and any other closing expenses or fees by paying cash for your Maine house flips. As a result, if you’re flipping properties in Maine and have cash on hand, you should always use it.
Taking out a loan or other forms of financing to buy and remodel a property might significantly affect your earnings. If you took out a $400,000 loan to buy a house in Maine, you’ll keep paying mortgage payments until the home is sold. Even a 5% down payment on a home might cost upwards of $10,000 to begin with. You’ll need to spend an extra $10,000 on top of the $20,000 for repairs and improvements.
Repairs and upgrades, unfortunately, take time. As a result, you may wind up paying your mortgage for a longer period of time, perhaps resulting in a large loss of profit margin. Furthermore, after deducting property taxes, construction permits, utilities, marketing costs, closing fees, house insurance, broker commissions, and other expenses connected with flipping properties in Maine, you may not be able to generate any money.
As a consequence, having cash may help you save money on all of these things while also allowing you to keep as much of your earnings as possible.
But don’t worry if you don’t have any cash on hand. There are still a few more options for sustaining your house-flipping business on a tight budget.
2. Research the Cities and Neighborhoods
After you’ve identified the homes listed below market value and considered other factors such as active days on the market, you can assess the neighborhood’s attractiveness. When it comes to house flipping in Maine, the quality of the neighborhood is crucial. Other quantitative variables, such as the quality of education, entertainment, parks and recreation, and the shopping experience in the region, should be evaluated in addition to the listing and sale price.
Existing housing stock in Maine’s historic towns, as well as a rapidly expanding metropolitan zone, may benefit from rehabilitation and repair. In Maine, you may make a solid livelihood by flipping properties. You must, however, learn to discern appropriate options.
Here is a list of the 4 best cities to flip houses in Maine for 2022.
Flipping Houses in Portland, ME
Portland is the biggest city in the state of Maine. This city is composed of 20 neighborhoods and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Portland was just $475,000 , trending up 8.1% year-over-year. The median listing price per square foot was $223.
The city offers 20 public schools rated good or higher by GreatSchools and 16 private and charter schools. Portland also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 20 neighborhoods in Portland, East Bayside is the most expensive one, with a median home price of $895,000. On the other hand, Oakdale is the most affordable neighborhood, with a median listing home price of just around $354,000. There are also some other great neighborhoods, like North Deering, Riverton, and Downtown Portland.
Flipping Houses in Augusta, ME
Augusta is the capital city of Maine. It consists of 31 zip codes and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Augusta was $225,000, trending up 4.7% year-over-year. The median listing price per square foot was $154.
The city offers 11 public schools rated good or higher by GreatSchools and 3 private and charter schools. Augusta also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Out of the 31 neighborhoods in Augusta, zip code 04963 is the most expensive one, with a median home price of $380,000. Conversely, Waterville is the most affordable neighborhood, with a median listing home price of just around $190,000. There are also some other great neighborhoods, like Webster Street, Sidney, and Gardiner.
Flipping Houses in Bangor, ME
Bangor is a city in Maine that consists of 6 neighborhoods and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Bangor was $219,000, trending up 9.5% year-over-year. The median listing price per square foot is $140.
The city offers 13 public schools rated good or higher by GreatSchools and 6 private and charter schools. Bangor also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 6 neighborhoods in Bangor, Broadway is the most expensive, with a median home price of $289,000. On the other hand, West Side Village is the most affordable neighborhood, with a median listing home price of just around $125,000. There are also some other great neighborhoods like Outer Essex, Mount Hope-Stillwater Park, and Little City.
Flipping Houses in Bar Harbor, ME
Bar Harbor is a city in Maine that is composed of 29 neighborhoods and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Bar Harbor was $597,000, trending up 7.6% year-over-year. The median listing price per square foot is $330.
The city offers 3 public schools rated good or higher by GreatSchools and 1 private and charter school. Bar Harbor also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Of the 29 neighborhoods in Bar Harbor, Mount Desert is the most expensive one, with a median home price of $870,000. On the other hand, Webster Street is the most affordable neighborhood, with a median listing home price of just around $220,000. There are also some other great neighborhoods, like Ellsworth, Downtown Lewiston, and North Deering.
3. Assemble your team
Whether you’re flipping houses in Maine full-time or part-time, you’ll need a team to make each flip a success. A real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant are all likely to be required.
Working with a trusted team rather than a fresh specialist for each assignment is also a smart option if you want to make house flipping a regular element of your investing plan.
4. Select and Purchase your Maine House
It’s finally time to buy your Maine house after you’ve sorted out your finances and determined whether or not it’s a suitable investment. Another consideration when buying a property is that properties that require more upkeep and maintenance are often less expensive to buy. As a result, reselling them will take extra time.
Houses in good shape that do not need large repairs or alterations, on the other hand, are significantly more expensive. If you spend more money up front, you will save a lot of money in the long run and won’t have to worry about house improvements.
As a result, while shopping for a home in Maine, aim to strike a balance between these concerns. Choose a house that fits your needs, price, and timeline.
5. Repair and Renovate the House
Take into account the expense of repairs and enhancements, as well as the time required to accomplish them. Determine which upgrades will add the most value and if they will be appealing to prospective buyers. Air conditioning and energy-efficient modifications to a house may immediately increase its worth for homeowners who want to escape the hot and humid Maine summers and harsh Maine winters.
Furthermore, power washing the exterior of the house, painting the inside, repairing a leaking faucet, reglazing and caulking bathtubs, and cleaning the floors are all minor but necessary tasks that will help your home sell faster.
6. Resell the Renovated Maine House for a Profit
After you’ve completed mending and restoring the property, it’s time to re-list it. In Maine, you have two alternatives for reselling your house. Selling as a for-sale-by-owner (FSBO) is the first option while selling through a real estate agent is the second.
One of the many advantages of selling your house without the assistance of a real estate agent is the cost savings on commissions. Even if you sell your Maine home on your own, you must pay a fee to the buyer’s agent (3 percent ). If you want to sell your home quickly, you’ll need to be prepared to haggle like a pro and fill out all of the paperwork appropriately.
You may always employ a professional real estate agent if you don’t want to deal with the inconvenience of selling your house yourself. The process of creating, debating, signing, and closing contracts will all be streamlined. You will, however, be compelled to pay them a charge of 3% for their services.
How much money do house flippers make in Maine?
The average income per flip in the United States is $60,000, whereas it’s only around $46,000 in Maine. As a result, the average revenue per flip in Maine is $14,000 lower than the national average. To put it another way, it makes sense. Affordable housing and a rising standard of living in this state attract a large number of real estate investors, resulting in increased competition and lower revenue per flip.
It’s also important to remember that revenue per flip isn’t the same as net profit. You’ll also want funds for repairs and restorations. A wide range of repairs may be necessary depending on the current state of the property, but if you invest $25,000 in repairs, the home will be worth it. You’ll have a net profit of $8,000 to $14,000 to deal with after subtracting all additional fees and levies.
As a result, it’s normal to expect to make at least $10,000 from flipping a single house in Maine. Furthermore, the typical real estate investor flips 4-5 residences each year. That means you can expect to make around $50,000 per year if you flip houses full-time in Maine.
Overall, flipping houses in Maine is a great way to get started in real estate investment. Even though Maine is not one of the most profitable states for flipping properties, it is a rapidly developing state and has a lot to offer long term investors. Furthermore, finding profitable flips in the Pine Tree State requires a combination of your talents, competence, and luck. If you find a great deal on a house in Maine, make sure you follow a well-thought-out strategy, remodel the property if necessary, and sell it to a high-end buyer.