How To Flip Houses In Wisconsin: 15-Step Home Renovation Guide
Sep 05, 2024
Wisconsin boasts an active and growing housing market that investors may want to pay closer attention to. In particular, the state's strong economy, relative affordability, and diverse industries have led to steady population growth. Millennials, in particular, have chosen to call Wisconsin home, which bodes well for local investors.
“The median age of the population residing in the state of Wisconsin is approximately 39.1 years of age,” according to World Population Review. That’s important on many levels, but primarily because older millennials (33 to 42 years old) have represented the largest population of buyers for the better part of a decade.
The Badger State’s largest age population is in its prime homebuying years, and those who learn how to flip houses in Wisconsin may be in line to benefit from a massive tailwind. Whether you are new to investing or simply want to further your real estate knowledge, this guide will teach you everything you need to know about how to flip houses in Wisconsin, including:
- What Is Flipping Houses?
- Why Flip Houses In Wisconsin?
- Wisconsin House Flipping Statistics
- How To Flip Houses In Wisconsin In 15 Steps
- How Much Do House Flippers Make In Wisconsin?
- Is House Flipping Illegal In Wisconsin?
- Do You Need A License To Flip Houses In Wisconsin?
- How Much Does It Cost To Flip A House In Wisconsin?
- How To Flip A House In Wisconsin With No Money
- What's The Best Place To Flip Houses In Wisconsin?
- Is It Hard To Flip Houses In Wisconsin?
- How Do You Find Contractors For Flipping Houses In Wisconsin?
- Final Thoughts On Flipping Homes In Wisconsin
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What Is Flipping Houses?
House flipping is one of the most popular real estate exit strategies used by today’s most successful investors, and for a good reason: the income potential is hard to ignore. According to ATTOM Data Solutions’ latest Year-End Home Flipping Report, the average home flipped as recently as last year “typically generated a gross profit of $67,900 nationwide.”
Flipping houses has proven it belongs in investors’ portfolios, which begs the question: What is house flipping? On the surface, it’s an investment strategy that has investors buy, rehab, and resell homes for a profit. Beneath the surface, however, home flipping is an involved process that requires a unique synergy between each stage to mitigate risk and maximize returns.
Investors must buy subject properties below their market value to succeed as house flippers. Typically, doing so will require buying homes from motivated sellers or those at risk of foreclosure. Securing deals below the home’s actual value simultaneously mitigates risk and increases profit margins.
Once the homes are acquired, investors will spend money to rehab and fix them. Renovations must be specific and cost-effective, as their sole purpose is to increase the home's value as much as possible without exceeding a predetermined budget. A good rule of thumb most investors abide by is to make the home slightly better than those it will be compared to in the same neighborhood. That way, the property will receive the most attention when placed on the market.
Investors will proceed to sell the house when all the necessary renovations have been made, and the property has reached its desired condition. If done correctly, the sale price will be high enough to cover the expenses of the flip (everything from the construction costs to the loan) and provide the investor with an attractive payday.
Why Flip Houses in Wisconsin?
Flipping houses in Wisconsin offers lucrative opportunities due to the state's strong real estate market and affordable property prices. According to recent data, the median home price in Wisconsin is approximately $270,000, significantly lower than the national average, making it an attractive market for investors looking to buy low and sell high. Wisconsin's steady economic growth and diverse job market contribute to a stable housing demand, particularly in metropolitan areas like Milwaukee, Madison, and Green Bay. Additionally, the state's relatively low property taxes compared to neighboring states further enhance the profitability of house flipping.
Another compelling reason to flip houses in Wisconsin is the state's favorable market conditions for first-time homebuyers and rental investors, which helps sustain a steady pool of potential buyers. The state's homeownership rate is around 67%, reflecting a strong preference for owning homes among residents. This demand, combined with Wisconsin’s housing market trends, indicates that well-renovated homes can sell quickly and at competitive prices. Investors can take advantage of this by targeting properties in desirable neighborhoods where renovation can significantly increase the home's market value, ensuring a solid return on investment.
Wisconsin also boasts a relatively low cost of living, making it an appealing destination for both local and out-of-state buyers. The state's economy is bolstered by industries such as manufacturing, agriculture, and healthcare, which continue to provide job stability and attract new residents. Moreover, recent statistics show that home sales in Wisconsin have increased by about 6% year-over-year, signaling a robust demand for housing. These factors, coupled with the availability of distressed properties that can be acquired below market value, create a prime environment for house flippers to thrive in Wisconsin's real estate market.
Read Also: How To Wholesale Real Estate In Wisconsin
Wisconsin House Flipping Statistics
Here’s an overview of the vital data and metrics that every aspiring house flipper in Wisconsin must know:
- Population: 5,893,718
- Employment Rate: 63.2%
- Median Household Income: $70,996
- Median Sale Price: $323,900 (+8.6% Year-Over-Year)
- Number Of Homes Sold: 6,451 (+12.8% Year-Over-Year)
- Median Days On Market: 42 (+1 Year-Over-Year)
- Number Of Homes For Sale: 20,664 (+9.6% Year-Over-Year)
- Number Of Newly Listed Homes: 6,004 (+5.0% Year-Over-Year)
- Months Of Supply: 2 (+0 Year-Over-Year)
- Homes Sold Above List Price: 50.6% (-3.6 Points Year-Over-Year)
- Homes With Price Drops: 16.9% (+4.8 Points Year-Over-Year)
- Foreclosure Rate: 0.011% (1 Out Of 8,388)
*All Wisconsin housing market statistics are as of Q2 2024.
How To Flip Houses In Wisconsin In 15 Steps
Investors who want to learn how to flip houses in Wisconsin should start by following the seven steps outlined below:
- Pick Your Market
- Find Your Money
- Find Three Contractors
- Find An Investor-Friendly Agent
- Find A House To Flip
- Make Discovery Calls To Listing Agents
- Analyze The Property
- Call Agents & Submit Written Offers
- Perform Due Diligence When The Offer Is Accepted
- Close On The Deal
- Renovate The House
- Prep & List The House On The MLS
- Field Offers & Negotiate
- Accept The Best Offer
- Sell The House & Get Paid
Pick Your Market
Choosing the right market is one of the most critical steps in flipping houses in Wisconsin. The state offers a diverse range of markets, from bustling urban areas like Milwaukee and Madison to quieter, smaller cities and rural towns. When picking your market, consider factors such as property price trends, demand for housing, economic growth, and the local job market. For instance, areas with growing populations, new business developments, and improving infrastructure often present the best opportunities for profitable flips. Understanding these local dynamics can significantly impact your success in the house-flipping business.
In Wisconsin, focusing on up-and-coming neighborhoods or areas undergoing revitalization can provide the potential for higher returns. These neighborhoods often offer lower purchase prices with the promise of appreciation as the area improves. Researching market data, such as recent sales trends, average days on market, and rental rates, can help you identify which areas are on the rise. Additionally, connecting with local real estate agents and investors can provide insights into which neighborhoods have the most potential for growth and profitability in the near future.
Another crucial aspect of picking your market is understanding the local competition. In Wisconsin, some markets may be saturated with investors, which can drive up property prices and reduce potential profit margins. On the other hand, less competitive markets might offer more opportunities to secure properties at a discount. It’s also essential to assess the type of properties that perform well in your chosen market—whether it’s single-family homes, multi-family units, or condos. By carefully evaluating the local market conditions, competition, and property types, you can select a market that aligns with your investment goals and maximizes your chances of success in flipping houses in Wisconsin.
Find Your Money
Securing financing is a pivotal step in the house-flipping process, and it requires careful planning and research. In Wisconsin, as with any real estate market, having access to sufficient funds can determine the success of your project. You will need to consider various financing options, including traditional mortgages, private lenders, and hard money loans. Each option has its benefits and drawbacks, and the right choice will depend on factors like your financial situation, the scope of your project, and the terms of the loan.
Traditional loans from banks or credit unions are common, but they can be slow and may have stringent requirements. For quicker access to funds, especially if you’re looking to close on properties quickly, private and hard money lenders are often preferred. Understanding how to navigate these options and where to find reliable lenders is essential for efficiently funding your house-flipping ventures in Wisconsin.
How To Find Private & Hard Money Lenders
Finding the right private and hard money lenders can significantly impact your house-flipping success. Private lenders are individuals or groups who lend their own money to investors. They are often more flexible than traditional banks and can offer faster approval processes. To find private lenders, network with real estate investment groups, attend local meetups, and leverage online platforms that connect investors with potential lenders. Personal referrals and recommendations from other real estate professionals can also be valuable resources.
Hard money lenders, on the other hand, are usually institutional investors or companies that offer short-term loans secured by real estate. These loans are typically used for quick funding and have higher interest rates compared to traditional loans. To find hard money lenders, consider using platforms like Kiavi and Lima One, which provide comprehensive lists of local and national lenders along with their contact information. Additionally, reaching out to real estate investment groups and attending industry events can help you connect with reputable hard money lenders in Wisconsin.
Understanding and securing the right type of financing is crucial to successfully flipping houses. Whether you opt for private lenders for their flexibility or hard money lenders for their speed, ensure you carefully evaluate the terms and conditions to make informed financial decisions.
Find Three Contractors
Finding reliable contractors is a crucial step in the house-flipping process in Wisconsin. The quality of your renovation work can significantly impact the overall success of your flip, so it's essential to partner with skilled professionals who can deliver results on time and within budget. Start by researching local contractors with a strong reputation and positive reviews. Seeking recommendations from real estate agents, fellow investors, or local trade organizations can provide you with valuable leads. Make sure to check their credentials, including licenses and insurance, and ask for references from previous clients to ensure they have a proven track record of successful projects.
It's advisable to obtain quotes from at least three different contractors to compare costs and services. This will help you get a sense of the market rates and prevent you from overpaying. Additionally, detailed and itemized quotes will give you a clearer picture of what each contractor offers and how they plan to execute the work. Be sure to discuss your project in detail with each contractor to gauge their understanding of your vision and their ability to meet your requirements. Communication and transparency are key factors in a successful contractor relationship.
How To Find A General Contractor
Finding a reliable general contractor is essential for overseeing and managing your house-flipping project in Wisconsin. A general contractor will coordinate the various trades needed for your renovation, ensuring that the work progresses smoothly and meets your expectations. To start, utilize online platforms like HomeAdvisor, Thumbtack, and Angi, which provide lists of vetted general contractors along with reviews and ratings. These platforms allow you to compare contractors based on their experience, customer feedback, and the scope of work they handle.
Another effective method is to seek recommendations from local real estate investors or professionals. They often have firsthand experience with contractors and can provide referrals based on their own successful projects. Additionally, attending local real estate and renovation meetups can help you connect with reputable contractors. Once you have a list of potential candidates, interview them to assess their communication skills, project management abilities, and familiarity with the specific needs of house flipping. Ensuring that your general contractor is well-suited to your project will contribute to a smoother renovation process and a more successful flip.
Find An Investor-Friendly Agent
Finding an investor-friendly real estate agent is a crucial step in flipping houses in Wisconsin. An agent who understands the needs of investors can provide valuable insights into the local market, help identify lucrative properties, and navigate the complexities of real estate transactions. Look for agents with experience working with real estate investors, as they will be familiar with the nuances of property flipping, including identifying potential deals, negotiating prices, and understanding market trends.
Investor-friendly agents are skilled in spotting properties that fit your investment criteria, whether they are fixer-uppers or properties in emerging neighborhoods. They can also offer advice on the best areas for flipping based on current market conditions and future growth potential. Their expertise in handling transactions efficiently can save you time and money, ensuring that your flipping ventures are both profitable and smooth. Building a strong relationship with a knowledgeable agent can be a key factor in achieving success in the competitive Wisconsin real estate market.
How To Find An Investor-Friendly Agent
Finding an investor-friendly real estate agent involves several key steps to ensure that you partner with someone who aligns with your house-flipping goals. Start by seeking recommendations from fellow real estate investors or local investment groups. These individuals can often refer you to agents who have a proven track record of working with investors and understanding their specific needs. Networking at real estate events and meetups can also lead you to agents experienced in property flipping.
Online resources are another valuable tool. Platforms like Zillow, Realtor.com, and Redfin allow you to search for agents with expertise in investment properties by filtering for those who specialize in or have experience with real estate investing. Additionally, look for agents who actively promote themselves as investor-friendly or who have a history of working with flippers. Once you have a shortlist of potential agents, schedule interviews to discuss your investment goals and assess their knowledge of the local market, negotiation skills, and ability to handle complex transactions. Choosing an agent who understands and supports your investment strategy is crucial for a successful house-flipping venture.
Find A House To Flip
Finding the right property is one of the most critical steps in flipping houses in Wisconsin. Start by utilizing various strategies to identify potential houses that fit your investment criteria. Driving for dollars involves driving through neighborhoods and looking for properties that appear distressed or vacant. This method allows you to spot opportunities that might not be listed on traditional real estate platforms. Take note of properties with overgrown lawns, boarded-up windows, or "For Sale" signs that could indicate motivated sellers.
Direct mail campaigns are another effective strategy for finding houses to flip. By sending targeted mailers to homeowners in specific areas or those who may be facing foreclosure, you can reach potential sellers directly. Crafting personalized letters or postcards can help you stand out and increase your chances of receiving responses from motivated sellers who might be open to selling their properties at a discount.
Additionally, utilizing the Multiple Listing Service (MLS) is essential for finding properties listed by real estate agents. The MLS provides comprehensive data on available properties, including details on price, condition, and location. Working with a knowledgeable real estate agent can further enhance your ability to identify good deals and access properties before they hit the general market.
Alternative Strategies to Find a House
When looking for houses to flip, exploring alternative strategies can be highly beneficial. Here are a few approaches to consider:
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The Day Zero Strategy: This approach involves identifying properties as soon as they hit the market. By acting quickly on new listings, you can capitalize on opportunities before other investors become aware. Set up alerts on real estate websites and work with your agent to stay informed about new listings in your target areas.
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The Old Listing Strategy: Look for properties that have been on the market for an extended period. These listings may have become stale, and sellers might be more willing to negotiate on price. Analyzing these properties can reveal potential deals that others have overlooked.
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The Wholesaler Strategy: Wholesalers are individuals or companies that find and contract properties and then sell the contract to other investors. Establishing relationships with local wholesalers can provide access to off-market deals that are not publicly listed. Networking within real estate investment groups can help you connect with wholesalers in your area.
In conclusion, finding the right house to flip in Wisconsin requires a multi-faceted approach. By combining traditional methods like driving for dollars and direct mail campaigns with alternative strategies such as monitoring the MLS and leveraging wholesaler networks, you can increase your chances of discovering profitable investment opportunities. Each method has its strengths, and utilizing a variety of strategies will help you identify the best properties for your flipping projects.
However, some investors may face challenges accessing the MLS. Thankfully, alternative listing platforms such as RedFin, Zillow, and Realtor.com can be used effectively. Apply the strategies mentioned above to these websites when flipping houses in Wisconsin. While these platforms are valuable, it’s important to note that the MLS remains the preferred source due to its more comprehensive data and detailed contact information.
Make Discovery Calls To Listing Agents
When flipping houses in Wisconsin, making discovery calls to listing agents is an essential step in evaluating potential properties. These calls help you gather critical information that can impact your investment decisions. Here are key questions to ask listing agents during these calls:
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Is the listing still active?: Confirming whether the property listing is still active ensures you’re not pursuing a home already under contract with another buyer. This step helps prevent wasting time on deals that are no longer available, allowing you to focus on viable opportunities.
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Are the listing’s photos up to date?: Inquire if the photos provided are current. Up-to-date photos give you a more accurate picture of the property's present condition. This helps in assessing the extent of repairs or renovations needed and aids in accurately estimating potential costs and profit margins.
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What is the current condition of the home?: Ask about the current state of the home to understand if it’s distressed or if there are any hidden issues. This information is crucial for evaluating the suitability of the property for a flip and estimating repair costs and potential challenges.
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Are you willing to work with an investor?: Find out if the listing agent is open to working with investors. This can foster honest communication and clear expectations. Additionally, if you don’t have a dedicated agent, this could be an opportunity to negotiate representation, allowing the agent to earn commissions on both sides of the transaction and potentially build a beneficial relationship for future deals.
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What is the owner’s reason for selling?: Understanding the seller’s motivation can provide valuable insights into their urgency and circumstances. While this information might not always be fully disclosed, any details gathered can be leveraged to negotiate a better deal and structure your offer in a way that meets the seller's needs.
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Is there a lot of competition for the property?: Ask about the level of interest or competition the property is receiving. Knowing if there are multiple offers or significant interest can help you gauge the urgency of the situation and adjust your bidding strategy accordingly, preventing you from overpaying or missing out on a profitable opportunity.
Remember, this step is for gathering information, not making deals. When ending the call, leave communications open by suggesting you'll get back to the listing agent after consulting your team and confirming whether this is a home you want to move forward with. This approach ensures a thorough and strategic evaluation process, which is vital for successfully flipping houses in Wisconsin.
Analyze The Property
Analyzing the property is a crucial step in the house flipping process in West Virginia. This involves assessing the property’s potential through key metrics, including the after-repair value (ARV), repair costs, and purchase price. By thoroughly evaluating these aspects, you can determine whether the property will be a profitable investment.
After-Repair Value
The after-repair value (ARV) is a fundamental metric for evaluating a property. It estimates the property's value after all renovations are complete. In calculating the ARV , you’ll need to look at comparable sales, or “comps,” which are recently sold properties similar in size, style, and location to your investment property.
For accuracy, choose comps that match the following criteria:
- Similar number of bedrooms and bathrooms
- Within 20% of the subject property’s square footage
- Located in the same neighborhood or nearby
- Sold within the last six months
- Recently renovated or in similar condition
Average the sale prices of these comps to get a realistic estimate of the property’s potential market value post-renovation. This ARV will help guide your investment decisions and assess the potential profitability of the flip.
Repair Costs
Estimating repair costs involves a detailed inspection and consultation with contractors. Start by listing all necessary repairs and renovations, then obtain quotes from multiple contractors to estimate labor and material expenses accurately.
It’s wise to include a contingency budget for unexpected costs, generally around 10-15% of the total repair budget. By carefully planning and leveraging professional expertise, you can estimate repair costs more precisely, which is essential for ensuring a profitable flip.
Purchase Price
To determine the purchase price, use the ARV and repair costs to calculate the maximum allowable offer (MAO). This formula helps you identify the highest price you can pay for the property while ensuring profitability. Key factors to consider include:
- The ARV: The estimated value of the property after repairs.
- Hard Money Loan Costs: Include interest rates (usually between 10% and 15%), origination fees, and points.
- Private Money Loan Costs: Factor in the interest and duration of the loan.
- Front-End Closing & Holding Costs: Typically around 2% of the purchase price, plus ongoing costs like insurance, utilities, and taxes.
- Backend Closing Costs: Usually 1% of the ARV.
- Realtor Fees: Generally 6% of the purchase price, though this can be negotiable.
- Projected Profit: Desired profit margin based on your investment goals.
Subtract all these costs from the ARV to determine the MAO, which will help you ensure a profitable investment while flipping houses in West Virginia.
Call Agents & Submit Written Offers
The next step in flipping houses in Wisconsin is to reach out to the listing agents you've contacted and inform them of your intention to submit a written offer. Ensure that your offer is in line with the maximum allowable offer (MAO) you calculated earlier. By making a well-informed and competitive offer, you position yourself as a serious buyer and enhance your chances of securing the property.
It’s crucial to have the agent representing you—whether it's the listing agent or an investor-friendly agent you’ve established a relationship with—submit the written offer on your behalf. Agents are familiar with the proper procedures and can handle the necessary paperwork efficiently. In Wisconsin, this typically involves using the Wisconsin Offer to Purchase form, which details the terms and conditions of your offer.
Here are the key details to provide your representing agent for the written offer:
- Purchaser Name: Specify the name of the purchaser, whether it’s you personally or an LLC. Using an LLC (Limited Liability Company) for transactions can offer added asset protection. If purchasing through an LLC, include the articles of incorporation to verify that you are authorized to act on behalf of the company.
- Offer Price: State the offer price you’ve determined based on your calculations.
- Deposit Amount (Earnest Money Deposit): Include an earnest money deposit, usually ranging from 1% to 5% of the purchase price, to demonstrate your commitment. Earnest money deposits are often refundable, but ensure you include a contingency to safeguard this amount.
- Contingencies: Include a home inspection contingency, typically seven days, to allow for a thorough inspection of the property. This contingency provides an opportunity to back out of the deal and reclaim your deposit if significant issues are discovered.
- Closing Timeline: Specify a closing date, ideally 14 days or sooner, to appeal to sellers who prefer a quick transaction. Cash offers can expedite the process, making your offer more attractive.
- Seller To Deliver Free & Clear Title: Require the seller to provide a clear title, free of any liens or encumbrances, to avoid unexpected legal issues.
- Buyer’s Agent Name: Clearly identify your agent to ensure proper representation throughout the transaction.
- Proof Of Funds: Attach proof of funds from your lender to demonstrate your financial capability to complete the purchase, making your offer more credible and appealing to the seller.
Calling agents and submitting written offers is a vital component of the house flipping process in Wisconsin. By ensuring your agent submits a professional and well-structured offer, you improve your chances of securing a profitable deal. Mastering this step is essential for successfully flipping houses and achieving your investment goals in Wisconsin. Remember, a well-prepared offer is key to making deals happen.
Perform Due Diligence When The Offer Is Accepted
Once your offer on a property in Wisconsin has been accepted, performing due diligence is a critical step before finalizing the purchase. This process ensures that there are no unexpected issues with the property and helps confirm that your investment aligns with your expectations. Start by conducting a thorough inspection of the property, which should include both structural and cosmetic assessments. This will help identify any potential problems that might not have been evident during initial viewings.
An essential part of this due diligence phase is creating a detailed scope of work. The scope of work outlines all the necessary repairs and renovations required to bring the property up to its after-repair value (ARV). This document should include specific tasks, estimated costs, and timelines for each aspect of the renovation. Having a clear and comprehensive scope of work will not only guide your renovation efforts but also help you manage your budget effectively. Additionally, it provides a basis for negotiating repairs with the seller or adjusting your budget if unforeseen issues arise.
Finally, review all legal and financial aspects associated with the property, including title searches, zoning regulations, and any existing liens. Ensuring that the property is free of legal encumbrances and that it adheres to local regulations is crucial to avoid future complications. By thoroughly performing due diligence and preparing a detailed scope of work, you can safeguard your investment and move forward with confidence in your house flipping project.
Close On The Deal
Closing on a deal in Wisconsin involves finalizing the purchase of the property and transferring ownership from the seller to you. This step is crucial as it marks the official start of your house-flipping project. Begin by coordinating with a real estate attorney or title company to handle the closing process. They will ensure that all legal documents are properly prepared and executed, including the deed transfer and any other necessary paperwork.
Before the closing date, review the final settlement statement carefully. This document outlines all the financial details of the transaction, including the purchase price, closing costs, and any adjustments for prorated taxes or utilities. Make sure all figures match your expectations and that there are no discrepancies. Confirm that your financing is in place, whether through a mortgage or a cash transaction, and ensure that you have the required funds available for the closing.
On the day of closing, be prepared to sign all the necessary documents and pay any remaining closing costs. Once the paperwork is signed and the funds are transferred, you'll receive the keys to the property, officially making you the new owner. At this point, you can begin executing your renovation plans according to the scope of work you developed earlier. Closing on the deal is a pivotal moment in the house-flipping process, setting the stage for the renovation and eventual sale of the property.
Renovate The House
Renovating the house is a critical phase in flipping properties in Wisconsin. The goal is to enhance the property to align with the projected after-repair value (ARV) and match or exceed the quality of comparable homes in the area. It’s important to avoid over-renovation, which can lead to inflated costs and diminished returns. Instead, focus on making targeted improvements that will provide the highest return on investment while staying within budget.
Before starting the renovation, ensure you have all necessary documents in place to protect both yourself and your investment. These essential documents help outline expectations and prevent potential disputes:
- Independent Contractor Agreement: This document formalizes the relationship between you and your contractor. It details the terms of the job, including payment schedules, timelines, and specific duties. It ensures both parties understand their obligations and protects you legally if issues arise.
- Final Scope Of Work: This comprehensive document outlines every aspect of the renovation, including tasks, materials, and deadlines. It provides clear instructions for the contractor and helps keep the project on track, avoiding misunderstandings and ensuring that the work meets your expectations.
- Payment Schedule: The payment schedule sets out when and how much you will pay the contractor. Payments are typically tied to the completion of specific milestones, helping to ensure that the work progresses as planned and preventing delays.
- Insurance Indemnification Agreement: This agreement confirms that the contractor has appropriate insurance coverage and agrees to indemnify you against any accidents or damages that occur during the renovation. It protects you from liability and potential financial losses related to the project.
- W-9: The W-9 form collects the contractor’s taxpayer identification information, which is necessary for tax reporting purposes. It ensures compliance with tax regulations and allows you to issue a 1099 form for payments made to the contractor.
- Final Lien Waiver: This document, signed by the contractor, acknowledges receipt of full payment and waives any future claims against the property. It ensures that you are not liable for additional payments after the renovation is completed.
With these documents in place, you can confidently proceed with the renovation, transforming your Wisconsin property into a market-ready home that maximizes its value.
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Prep & List The House On The MLS
Once your renovations are complete, the next crucial step in flipping houses in Wisconsin is to prep and list the property on the MLS (Multiple Listing Service). This process involves several key tasks to ensure the property stands out and attracts potential buyers. Here’s what you need to focus on:
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Final Punchlist: Start with a final punchlist to address any remaining details or minor repairs. This list should include items that need fixing, touch-ups, or final adjustments to ensure the property is in pristine condition. A thorough punchlist helps ensure that the home is move-in ready, which can significantly enhance its appeal to buyers.
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Home Staging: According to the Real Estate Staging Association (RESA), investing about 1% of the sale price into staging can yield an ROI of 5% to 15% over the asking price. Home staging involves arranging furniture, decor, and accessories to make the home look its best and appeal to potential buyers. Well-staged homes often sell faster and at higher prices because they help buyers envision themselves living in the space.
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Professional Photos: High-quality, professional photos are essential for making a strong first impression online. Professional photographers can capture the home’s best angles and features, making it stand out in listings. High-resolution images not only attract more interest but also convey the property’s value effectively, potentially leading to quicker sales.
Set An Enticing Asking Price
Setting the right asking price is crucial for a successful sale. To determine an enticing price, analyze recent sales of comparable properties in the area, taking into account the upgrades and condition of your home. Consider conducting a Comparative Market Analysis (CMA) to gauge where your property stands in the market. Pricing it competitively can attract more potential buyers and generate higher interest, ultimately leading to a quicker sale and better returns.
Field Offers & Negotiate
Once your property is listed on the MLS, the next crucial step in flipping houses in Wisconsin is to field offers and negotiate with potential buyers. This phase is where your skills in negotiation and market knowledge come into play to secure the best possible deal.
As offers begin to roll in, carefully review each one to assess its merits. Consider not only the offered price but also the terms and contingencies included. Look for offers that align with your financial goals and timeline. Pay close attention to the buyer’s ability to close the deal, which can be gauged by their financial qualifications and any contingencies such as inspection or appraisal conditions.
Negotiation is key in this stage. Engage in discussions with prospective buyers to potentially improve their offers or terms. Flexibility on your part can lead to better outcomes, such as higher selling prices or more favorable closing conditions. Be prepared to counteroffer and make strategic adjustments to meet the buyer’s needs while still achieving your goals. Effective negotiation can help you maximize your return on investment and ensure a successful sale.
Accept The Best Offer
After reviewing and negotiating the various offers on your flipped property, the final step is to accept the best one. This decision requires careful consideration of several factors to ensure you make the most advantageous choice for your investment.
First, evaluate each offer in terms of its financial benefits, including the offered purchase price and any additional terms or concessions. The highest offer might seem like the obvious choice, but it's essential to consider other aspects such as the buyer’s financing situation and the contingencies attached. An offer with fewer contingencies or a quicker closing date might be more desirable, even if it’s slightly lower in price, as it reduces the risk of deal complications and delays.
Once you've selected the best offer, formally accept it by signing the purchase agreement and communicating your decision to the buyer and their agent. Ensure that all terms are clearly outlined and agreed upon by both parties. This acceptance solidifies the deal and sets the stage for the closing process. By choosing the best offer, you maximize your returns and finalize the successful flip of your Wisconsin property.
Sell The House & Get Paid
With the deal finalized and all conditions met, the final step in flipping houses in Wisconsin is to sell the house and receive your payment. This process involves coordinating with the buyer, their agent, and your own team to ensure a smooth closing.
The closing day marks the official transfer of ownership. At this point, you’ll need to provide all necessary documents to the title company or closing attorney, including the finalized sales contract, proof of repairs, and any required disclosures. Once all paperwork is completed and the title is transferred, you’ll receive the proceeds from the sale. This typically includes the sale price minus any closing costs and fees.
Ensure that all financial aspects are settled, including the payment of any outstanding liens or mortgages. After receiving your payment, conduct a final review to ensure that all aspects of the transaction are complete and that you’ve met your financial goals. By carefully managing this final step, you can successfully conclude your house flip and enjoy the rewards of your investment in Wisconsin.
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How Much Do House Flippers Make In Wisconsin?
House flipping in Wisconsin offers profitable opportunities, with recent data indicating that the average gross flipping profit for real estate investors in the state is around $65,000, according to ATTOM Data Solutions. However, profits can vary widely depending on factors such as property location, purchase price, renovation expenses, and the overall market conditions at the time of sale. In some cases, savvy investors who buy properties at significant discounts and manage renovation costs effectively can see returns well above the state average.
Wisconsin has some of the most profitable house flipping markets in the country, particularly in cities where demand for renovated homes is strong. The state boasts three of the top five cities with the nation's largest gross flipping profits on median-priced transactions:
- Milwaukee, WI: $75,000 average gross flipping profit
- Madison, WI: $68,000 average gross flipping profit
- Green Bay, WI: $62,000 average gross flipping profit
These cities provide attractive opportunities for house flippers due to their growing populations, robust local economies, and increasing demand for updated homes. Flippers who are well-versed in Wisconsin’s real estate market can capitalize on these trends by selecting the right properties, executing cost-effective renovations, and timing their sales to maximize returns.
Understanding the local market dynamics and employing strategic approaches, such as focusing on up-and-coming neighborhoods or targeting homes in need of cosmetic improvements, are essential for maximizing profits in Wisconsin. In addition, building a reliable network of contractors, agents, and lenders can streamline the flipping process, helping investors to boost their returns in the competitive Wisconsin housing market.
Is House Flipping Illegal In Wisconsin?
House flipping is not illegal in Wisconsin; however, investors must comply with state and local regulations to ensure their activities are lawful and ethical. Flipping houses involves purchasing properties, renovating them, and selling them for a profit. In Wisconsin, as in most states, this practice is perfectly legal as long as investors adhere to laws governing real estate transactions, such as obtaining the necessary permits for renovations, adhering to building codes, and following proper disclosure practices when selling a property. Violating these regulations can result in fines, legal action, or delays in the flipping process.
It's also important for house flippers in Wisconsin to be aware of potential legal issues related to financing and property acquisition, such as fraud or misrepresentation. Flippers should ensure that all transactions are transparent and conducted in good faith, especially when dealing with distressed properties or foreclosures. Working with licensed professionals, including real estate agents, contractors, and attorneys, can help investors navigate the legal landscape and avoid common pitfalls. By following the rules and operating with integrity, investors can successfully and legally flip houses in Wisconsin.
Do You Need A License To Flip Houses In Wisconsin?
Holding and maintaining a real estate license is not necessary to flip homes in Wisconsin.
However, acquiring a real estate license can offer valuable advantages. Although it entails paying annual fees and passing regular exams to maintain professional status, investors gain access to a nationwide network of agents and their best tool: the MLS.
Read Also: Wisconsin Real Estate Classes: Wholesaling, Flipping & Licensing
How Much Does It Cost To Flip A House In Wisconsin?
Flipping a house in Wisconsin can be a profitable venture, but it’s crucial to understand the various costs involved to ensure a successful project. From acquisition and renovation expenses to carrying and selling costs, accurately estimating these expenditures will help you plan your investment and maximize returns. Below, we break down the key cost components associated with flipping a house in Wisconsin.
The Home Purchase Price
In Wisconsin, the median home price is around $270,000, making it more affordable than many other states. Prices can vary widely depending on the location, with homes in urban areas like Milwaukee or Madison costing more than those in smaller towns or rural regions. A portion of the purchase price will typically be your down payment, which can range from 5-20% if financed through a mortgage, or you may choose to purchase outright with cash. It’s important to research local markets and target neighborhoods where property values are likely to rise, as this will impact your overall profit potential.
The Home Repair Costs
Renovation costs in Wisconsin can vary significantly based on the extent of the work required. On average, investors can expect to spend between $20,000 and $50,000 on standard rehabs, depending on the size and condition of the property. For a basic cosmetic renovation, costs might range from $15 to $30 per square foot, while more extensive structural or mechanical repairs can push costs upwards of $60 per square foot or more. To get the most accurate estimates, it's advisable to consult with several contractors to assess the property and provide detailed quotes before committing to the purchase.
The Carrying Costs
Carrying costs are ongoing expenses that accrue while you own the property and prepare it for sale. In Wisconsin, these costs typically include property taxes, homeowners insurance, utilities, and maintenance such as lawn care and snow removal. Property taxes in Wisconsin average around 1.68% of the home's assessed value, which is higher than the national average. These costs can add up quickly, especially if the property takes longer to sell than anticipated, so it's essential to budget for them when planning your flip.
Closing, Marketing, & Sales Costs
When it’s time to sell, you’ll need to account for closing, marketing, and sales costs. These include real estate agent commissions (usually around 5-6% of the sale price), listing fees, title transfer fees, and other legal expenses. Additionally, you might incur costs for staging the home or marketing it to potential buyers. Together, these expenses can represent a significant portion of your budget, so it’s important to factor them into your overall cost analysis to ensure that your flip remains profitable.
Read Also: How To Flip Houses With No Money: Top 10 Expert Strategies
How To Flip A House In Wisconsin With No Money?
Flipping houses in Wisconsin doesn't require investors to use their own money. Instead, they can leverage funds from private and hard money lenders who are actively seeking profitable opportunities themselves. This eliminates the need for dealing with traditional banking institutions, credit checks, and lengthy approval processes.
Using private and hard money loans provides quick access to cash and speeds up the deal-making process. Additionally, investors can explore alternative strategies like wholesaling, which involves acquiring property rights and selling them to end buyers for a fee, requiring minimal capital investment.
What's The Best Place To Flip Houses In Wisconsin?
The best places to flip houses in Wisconsin are often those experiencing significant growth, economic development, and increasing property values. These locations offer potential for profitable investments due to rising demand and favorable market conditions. Here are five cities in Wisconsin that stand out for house flipping:
- Milwaukee: As Wisconsin’s largest city, Milwaukee offers a dynamic real estate market with diverse investment opportunities. The city has seen a 4.8% increase in home values over the past year, and its ongoing downtown revitalization and development projects continue to attract new residents and businesses. With a median home value of $244,000, Milwaukee presents a balanced mix of affordable entry points and strong profit potential for flippers.
- Madison: The state capital, Madison, is a thriving market with a robust economy, largely driven by the University of Wisconsin and a growing tech sector. The city’s population growth rate of 1.4% per year and a median home value of $390,000 create a favorable environment for real estate investors. Madison's strong demand for housing and relatively low inventory levels make it an attractive market for house flippers looking to capitalize on quick sales.
- Green Bay: Known for its affordability and steady growth, Green Bay is another excellent market for house flipping in Wisconsin. The median home value in Green Bay is around $235,000, and the area has seen a 6% increase in property values over the past year. The city’s expanding job market and affordable cost of living continue to draw new residents, creating ongoing demand for updated and renovated homes.
- Kenosha: Situated between Milwaukee and Chicago, Kenosha benefits from its strategic location and growing appeal as a commuter city. The median home value in Kenosha is approximately $285,000, with an annual increase of 5.2% in property values. The city’s expanding business sector and attractive lakefront properties make it a solid choice for house flippers looking to tap into a market that offers both affordability and potential for growth.
- Eau Claire: With a median home value of $270,000, Eau Claire offers house flippers a market characterized by affordability and rising demand. The city has experienced a 4.5% increase in home values over the past year, supported by a growing local economy and an influx of new residents attracted by its quality of life. Eau Claire’s vibrant downtown and ongoing development projects make it a promising location for flipping houses in Wisconsin.
Choosing the right city is crucial for maximizing your house-flipping profits in Wisconsin. These locations offer promising opportunities due to their economic growth, rising home values, and strong market demand, making them excellent choices for both new and experienced investors.
Final Thoughts On Flipping Homes In Wisconsin
Flipping homes in Wisconsin has emerged as a highly profitable venture for numerous investors but demands diligent attention to detail. Those who approach it with thoroughness and follow the necessary steps can optimize profits while minimizing risks.
At Real Estate Skills, our team of experts is ready to provide you with the tools you need for flipping houses in Wisconsin. We're committed to providing the knowledge, resources, and support you need to navigate a Wisconsin property flip successfully. So avoid common mistakes and maximize your returns by leveraging our expertise.
Ready to take your real estate investing to the next level? Learning how to flip homes in Wisconsin is just the beginning. Watch our Free Real Estate Investor Training to learn how our Ultimate Investor Program can unlock even more opportunities and strategies in the Wisconsin market. Don't miss out—take the next step toward maximizing your investment potential today!
*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.
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