If you are looking for a comprehensive guide to start flipping houses in the state of Maryland, you’ve come to the right place.
Flipping houses is one of the best ways to get started investing in real estate. It might be a lucrative business enterprise. However, because it is a high-risk investment, you must take into account a number of factors.
But have no fear, I’m here to help you with your research and options. This detailed guide breaks down market research, assessment, and technique for flipping properties in Maryland.
Flipping Houses in Maryland
Maryland has one of the country’s hottest housing markets. It’s a once-in-a-lifetime opportunity for house flippers to make money. Regardless of the low property market valuation, investors that select the right properties and flip houses in Maryland profit handsomely.
Investing in Maryland houses is no exception to the concept that any investment, including real estate, is extremely niche 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 extensive understanding of the intricacies of these individual property markets may be beneficial at every level.
Analyzing the Maryland Housing Market in 2022
Maryland has the 7th most expensive housing market in the US. Maryland’s average house value is $403,076 as of April 2022, which is significantly higher than the national average home value of $344,000. Furthermore, house values in Maryland climbed by a little more than 8.49% in 2021, and are expected to rise by a stunning 10.9% in 2022. These prices, on the other hand, vary even within the state, indicating how regional and localized property markets are.
Maryland’s property market trend has attracted real estate investors from all across the country. Residences in Maryland are in more demand than they are available. In Maryland’s housing market, this has resulted in a strong seller’s market. It’s easy to see why investors are flocking to the real estate market in Maryland. The rising population and improved employment and education sectors are two of the most important drivers of progress. Maryland has an 90% high school graduation rate and a $82,000 median household income.
Furthermore, Maryland’s high-cost housing market makes houses less accessible to first-time homebuyers and investors. You’ll need more money to get started, which means there will be fewer novice investors and, as a result, less competition in the business.
How to know if the house in Maryland is a good investment?
After studying Maryland’s housing market and economy in general, you’ll most likely want to look into a more specific area and neighborhood to find possible homes. Keep in mind that not every local real estate market has the same kind of investment opportunities.
In general, a variety of factors go into assessing whether or not a property is a good investment. When you’re just getting started, avoid local marketplaces with a lot of inventory and postings that have been active for a long time. Houses in Annapolis, Maryland, sell after an average of 40 days on the market. This means that if the property in the zone is still operational after 40-55 days, it is a no-go.
If the price of a property in Maryland is less than the local market average, it is another sign that it is a good investment. Looking for houses that are significantly less costly than past sales in the region is one of the simplest ways to detect potential value. Remember that the less expensive homes will require significantly more changes than the more expensive ones.
How much should I pay for a house in Maryland?
It’s usually a good idea to stick to the 70% rule when deciding how much to spend on a home in Maryland. According to this rule, you should never spend more than 70% of the house’s after-repair value, less repair and renovation expenses. Let’s say you buy a house in Maryland and want to spend $30,000 on repairs and remodeling. Keep in mind that upgrades raise the property’s market value. Let’s say your house is worth $450,000 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 $285,000.
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 Maryland while still leaving you with a good profit margin.
Do you need a real estate license to flip houses in Maryland?
In Maryland, you don’t need a real estate license to flip properties. Getting both a realtor and a contractor’s license is typically a smart idea if you want to start flipping houses in Maryland full-time.
It’s OK if you don’t want to cope with the difficulties of obtaining a real estate or contractor’s license in Maryland. In this case, I strongly suggest you deal with a seasoned realtor and contractor with whom you can build a good working relationship.
Finally, locating a reliable contractor or repairman might be difficult if you are new to Maryland. In addition, zoning regulations and requirements differ by city, and market trends change often. Working with a reputable agent or contractor might help you anticipate issues.
How to start flipping houses in Maryland and make a profit?
Once you’ve done extensive research on the Maryland property market and are certain that the house is a sound investment, you’re ready to start your home-flipping journey in Maryland. To start flipping houses in Maryland and profit handsomely from this sort of real estate investing, follow these six steps.
1. Create a Budget and Secure Financing
The first thing to consider when flipping properties in Maryland 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 Maryland house flips. As a result, if you’re flipping properties in Maryland 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 $450,000 loan to buy a house in Maryland, you’ll keep paying mortgage payments until the home is sold. Even with a 10% down payment, you might need to put down $45,000 upfront. You’ll also need to spend an extra $5,000 on top of the $25,000 for repairs and improvements.
Unfortunately, repairs and improvements take time. As a result, you may end up paying your mortgage for a longer length of time, perhaps resulting in a significant profit margin loss. Furthermore, you may not be able to earn any money after accounting for property taxes, building permits, utilities, marketing costs, closing fees, home insurance, broker commissions, and other expenditures associated with flipping properties in Maryland.
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
You may analyze the neighborhood’s desirability once you’ve located the properties that are listed below market value and taken into account other indicators such as active days on the market. When it comes to house flipping in Maryland, the neighborhood’s quality is critical. In addition to the listing and sale price, other quantitative elements such as the quality of education, entertainment, parks and leisure, and the shopping experience in the area should be considered.
Existing housing stock in historic towns in Maryland, as well as a quickly rising urban zone, may benefit from rehabilitation and repair. You may earn a good living flipping houses in Maryland. However, you must learn to recognize suitable choices.
Here is a list of the 4 best cities to flip houses in Maryland for 2022.
Flipping Houses in Baltimore, MD
Baltimore is one of the biggest cities in the state of Maryland. This city is composed of 230 neighborhoods and offers multiple affordable duplexes, townhouses, and affordable multi-family homes. As of April 2022, the median listing price for houses in Baltimore was just $210,000, trending down 2.2% year-over-year. The median listing price per square foot was $159. The median sold price for a house was $240,000. Furthermore, on average, you ses in Baltimore sell after 48 days on the market.
The city offers 272 public schools rated good or higher by GreatSchools and 122 private and charter schools. Baltimore 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 230 neighborhoods in Baltimore, Locust Point is the most expensive one, with a median home price of $460,000. On the other hand, Carrollton Ridge is the most affordable neighborhood, with a median listing home price of just around $35,000. There are also some other great neighborhoods, like Canton, Frankfort, and Patterson Park.
Flipping Houses in Annapolis, MD
Annapolis is the capital city of Maryland. It is composed of numerous great neighborhoods. Moreover, Annapolis offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Annapolis was $575,000, trending up 9.6% year-over-year. The median listing price per square foot was $274. The median sold price for a house was $562,000. Furthermore, on average, houses in Annapolis sell after 41 days on the market.
The sale-to-list ratio of houses in Annapolis, MD is 103.35%, which confirms a strong seller’s market.
The city offers 19 public schools rated good or higher by GreatSchools and 9 private and charter schools. Annapolis also offers hundreds of grocery stores, restaurants, and cafes. There is also a plethora of beautiful parks and gyms for a healthier lifestyle.
Flipping Houses in Ocean City, MD
Ocean City is a city in Maryland that consists of 27 zip codes and offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Ocean City was $450,000, trending up 2.5% year-over-year. The median listing price per square foot is $406. The median sold price for a house was $471,500. Furthermore, on average, houses in Ocean City sell after 64 days on the market.
The sale-to-list ratio of houses in Ocean City, MD is 98.25%, which confirms a balanced housing market.
The city offers four public schools rated good or higher by GreatSchools. Ocean City 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 27 zip codes in Ocean City, 19944 is the most expensive, with a median home price of $1,300,000. On the other hand, Ocean Pines is the most affordable neighborhood, with a median listing home price of just around $390,000. There are also some other great neighborhoods, like Berlin, Lewes, and Millsboro.
Flipping Houses in Columbia, MD
Columbia is a city in Maryland and is composed of 10 neighborhoods. It offers multiple affordable duplexes, townhouses, and multi-family homes. As of April 2022, the median listing price for houses in Columbia was $425,000, trending up 6.3% year-over-year. The median listing price per square foot is $220. The median sold price for a house was $420,000. Furthermore, on average, houses in Columbia sell after 35 days on the market.
The sale-to-list ratio of houses in Columbia, MD is 104.8%, which confirms the strong seller’s market.
The city offers 42 public schools rated good or higher by GreatSchools and 9 private and charter schools. Columbia 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 10 neighborhoods in Columbia, River Hill is the most expensive one, with a median home price of $975,000. On the other hand, Eastlake is the most affordable neighborhood, with a median listing home price of just around $287,500. There are also some other great neighborhoods, like Long Reach, Hickory Ridge, and Kings Contrivance.
3. Assemble your team
Whether you’re flipping properties full-time or part-time in Maryland, you’ll need a crew to make each flip a success. There will very probably be a need for a real estate lawyer, a lender, a real estate agent, a general contractor, a few laborers, and an accountant.
If you want to make house flipping a regular part of your investment strategy, working with a trusted team rather than a new specialist for each job is also a good idea.
4. Select and Purchase your Maryland House
After you’ve sorted out your finances and assessed whether or not it’s a good investment, it’s finally time to buy your Maryland home. Another thing to keep in mind when purchasing a home is that homes that require more upkeep and maintenance are typically less expensive to purchase. As a result, reselling them will be more time-consuming.
Houses in good condition that do not require extensive repairs and modifications, on the other hand, are substantially more costly. If you invest more money upfront, you will save a lot of money in the long term and will not have to worry about home upgrades.
As a result, while shopping for a home in Maryland, aim to strike a balance between these concerns. Choose a house that fits your needs, price, and timeline.
5. Repair and Renovate the House
Consider the cost of repairs and improvements, as well as the time it will take to complete them. Determine which improvements will add the greatest value and if they will appeal to prospective purchasers. For homeowners who wish to escape the hot and humid Maryland summers and severe Maryland winters, adding air conditioning and energy-efficient upgrades to a property may quickly boost its value.
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 Maryland House for a Profit
After you’ve completed mending and restoring the property, it’s time to re-list it. In Maryland, 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 Maryland 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 Maryland?
The average income per flip in the United States is $60,000, whereas it’s only around $126,000 in Maryland. As a result, the average revenue per flip in Maryland is more than double 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 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 $30,000 in repairs, you’ll have a net profit of $70,000 to $80,000 to deal with after subtracting all additional fees and levies.
As a result, it’s normal to expect to make at least $70,000 from flipping a single house in Maryland. Furthermore, the typical real estate investor flips 3 houses each year in Maryland. That means you can expect to make around $210,000 per year if you flip houses full-time in Maryland.
Overall, flipping houses in Maryland is a great way to get started in real estate investment. Since it is one of the most profitable states for flipping houses, Maryland has a lot to offer for both short-term and long-term real estate investors. Furthermore, finding profitable flips in the Old Line State requires a combination of your talents, competence, and luck. If you find a great deal on a house in Maryland, make sure you follow a well-thought-out strategy, remodel the property if necessary, and sell it to a high-end buyer.