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Small-Town House Flipping: Strategies for Smaller Markets


May 15, 2020 by Tara Mastroeni
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Small-town house flipping may sound like an oxymoron, but it can be done. All it takes is the drive and know-how to employ a few slightly different strategies. With that in mind, we've laid out some common strategies for successfully flipping homes in smaller markets. Use them to help you come up with a game plan for your next investment.

The benefits of flipping in a small town

Before digging into specific strategies, it's important to note that there are a few unique benefits to house flipping in a smaller market as opposed to a crowded one. Here are a couple of reasons that you may be able to come out ahead by flipping in a small town:

There's less competition

Flipping houses in a booming market may seem like the dream. However, like anything else, there are downsides to it as well. For one thing, those markets are often the most oversaturated, which means that house flippers often have to go above and beyond to stand out from the crowd, and they have to operate on razor-thin margins to make it all work.

In a smaller market, there's bound to be less competition. This means that if you flip a home and do it well, it's almost guaranteed to stand out. Combined with the right marketing and word of mouth, there's no reason why you wouldn't find yourself fielding plenty of buyer interest.

Property values are likely lower

In a hot market, property values can start to soar. Once they do, even structurally sound fixer-uppers (also known as the ideal type of property to flip) can end up selling for well over their asking price. That can put a huge dent in even the most experienced investor's budget.

In smaller markets, since there's less competition overall, property values are likely to be lower. As an investor, you can use that to your advantage. If you can score a reasonably priced investment piece, you're already ahead of the game before you even start working on a single renovation.

Strategies for flipping in smaller markets

All that being said, flipping in a smaller market does require a slightly different strategy than flipping in a place where properties are flying off the shelves. Follow these tips to ensure that your next small-town investment is a success.

Stick to desirable locations

While an investor in a hot market may be able to take a gamble and purchase a property in an up-and-coming neighborhood, in a smaller market, it may not be wise to take that risk. Instead, if you stick to buying properties in areas that you know are popular with buyers, you'll be able to feel confident that the property will sell once you're finished.

Take the time to do your inspections

Unfortunately, since property values are lower in small towns, your budget for improvements needs to be smaller as well so you can be sure to see a profit. To that end, before you purchase any property, you need to have your inspections done first. This will significantly lower the chance of running into any unexpected big-ticket repairs halfway through the flip that will blow your budget out of the water.

Resist the urge to over-improve

By that same token, you'll want to resist the urge to over-improve the property. You know how far property values will go in your market, so set a renovation budget that allows you to see a profit and stick to it. Otherwise, you could end up having to either sell your flip at a loss or switch strategies altogether.

The bottom line

House flipping in a smaller market may be slightly different than in a market where real estate is booming. However, it can be done. You just need to follow a slightly different playbook to make it work. To that end, use the tips above to help you start house flipping in a small town.

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