July 17, 2020

By Charles Sells

When you think of Savannah, Georgia, you probably think of Spanish moss, old southern traditions, and, of course, the River Street ghost walks. Savannah is one of America’s most haunted cities, according to USA Today, and that makes it incredibly intriguing to the estimated 14 million tourists who visit the city each year. Many of those travelers visit in order to experience the (literally) haunting, historic city for themselves and leave with memories of chilling visits to confederate graveyards and goosebumps when they walk by the sites of dramatic, historic murders.

For real estate investors, Savannah’s haunted past has more practical implications. The city is full of pitfalls, thanks to its historic inventory and residents who are unusually dedicated to keeping their inventory looking as historic as possible. With gross flipping profits in Savannah hovering just under $30,000, however, investors still cannot resist the allure of this southern city. Investors interested in turning a profit in this hauntingly beautiful and arguably haunted metro area should bear a few lessons from other historic home-flippers in mind.

Lesson 1: Keep the Character but Lose the Cramped Spaces

One of the hardest things for a flipper to accomplish when flipping a home with an historic feel in Savannah can be to keep the authentic “feeling” of a property without also keeping the authentic discomfort that today’s modern residents will usually feel in older properties. For example, while antique windows are an appealing visual advantage for a property, investors must make sure that those windows do not let in the period-appropriate drafts that would have been experienced by owners throughout history. Similarly, bathrooms in older homes tend to be small, cramped, and too few in number for today’s modern homebuyer. Even the most dedicated historic homeowner usually does not want to share one bathroom among five or six residents in the property. Before buying, make sure that local zoning and historic governance will permit upgrades to the facilities, including adding another bath so there are at least two, total.

Pro Tip:
When investing in homes in Savannah, steer clear of the actual historic districts. These areas tend to have very rigid rules about what may be changed both internally and externally in a property when it is being renovated. Instead, focus on “basic” properties that meet certain predictable standards. This is not as exciting as flipping a home on the national register of historic houses, but it will certainly be more exciting for an investor’s balance sheet over the long term.

Lesson 2: Be Aware of Murder and Mayhem

Another benefit to investing based purely on numbers rather than emotion or excitement in a city like Savannah is that doing so renders investors far, far less likely to encounter detractors to property values like the famous Savannah ghost tours. Throughout the South, homeowners battle the detrimental effects of determined entrepreneurs hosting ghost tours. Some even get restraining orders against the companies to keep them off the allegedly haunted properties, but the groups still gather to stare from the public spaces across the street. Not only will a property with a good ghost story or gruesome murder myth attract particular attention in a city like Savannah (which makes a profession out of being haunted), that property will probably be difficult to list and sell for top dollar because of the increased foot traffic just outside the property line.

Pro Tip:
Do a little investigating before buying a Savannah property. More modern homes may seem immune to this issue, but if they are built on or near “haunted grounds” according to local lore, then a careless investor could end up with a troublesome ghost tour trekking by multiple times each night. In a city like Savannah where there are an unusually large number of these popular entertainment offerings, check into this type of potential drain on value before acquiring a property.

Lesson 3: Determine the Demand for Historic Properties in Your Area

It is easy to assume when visiting Savannah as a tourist that everyone loves the historic feel of the older homes and will want to live in one. However, full-time residents of the city actually tend to prefer more modern options. Although high-dollar historic districts with official “historic neighborhood” designations are attractive to certain buyers, most do not actually want the trouble (and, again, foot traffic) associated with owning a “showcase home” in neighborhoods like Ardsley Park or the aptly named Historic District. Of course, these areas do offer some attractive features, such as extremely walkable locations and unique architecture, but historic buyers in Savannah do tend to make up the minority.

Pro Tip:
Investors who want to fix-and-flip historic houses in a city like Savannah should look for “up-and-coming” historic areas that have been economically depressed in the recent past. These areas are less likely to have the famously stringent requirements and regulations in place when it comes to renovating properties, but still enable investors to cash in on the appeal of living in an area that has historic character.

Is Historic-Home Flipping Really Worth It?

When it comes to flipping historic homes, most investors agree that at least part of the payoff comes in the form of personal satisfaction. If an investor has a heart for history and loves watching old, abandoned properties re-emerge from their shadowy abandonment, then they may derive great gains and pleasure from historic fix-and-flips. They might also find themselves on a reality real estate show where these skills and talents are best showcased.

For most real estate investors, however, fix-and-flips in towns with a reputation for historic architecture should remain more practical. Of course, people moving to Savannah may find properties with a few historic touches to be more appealing. For example, some flippers like to install fireplaces that have antique touches or use fixtures that appear a bit dated. However, those “finishing touches” should be just that — finishing touches — and not prevailing themes in most houses.

Investors flipping in Savannah, Georgia, and enjoying that average gross profit of $30,000 (or, preferably, more) are, in most cases, investing in properties that have been acquired based on pure data through reliable sources of leads. This type of investor values continuity and consistency over the allure of historic architecture, and is far more likely to work directly with banks to “cherry pick” the best of bank-owned inventory, hire known contractors to keep costs low and predictable, and make the very simplest of improvements on fix-and-flip properties in order to maximize their profits.

The end result may not be the most glamorous house on the block, but these investors get to enjoy some of the most glamorous portfolio values in the business. By specializing in markets where their relationships enable them to identify good opportunities for acquiring investment properties that may be purchased at deep discounts, repaired and restored at minimal cost and over a minimal timeline, and then sold for top dollar, this type of investor thrives. Savannah, Georgia, can certainly be this type of market for an investor who has the connections and experience in the area to look past the hype of historic houses and find the truly valuable opportunities in the more conventional housing inventory. Turnkey providers and real estate investors who place greater importance on value than high-visibility flipping will truly love this “most-haunted city” and its decidedly un-spooky opportunities for real estate profits.

 

Simple Improvements for Maximum Profits

Whether an investor is flipping in Savannah or any other city in the country, knowing what the local economy and market have defined as “attractive” is extremely important. Sift through all the “design tips” to get to the core improvements that add value to the property. Here are a few examples of improvements that pay off in Savannah, Georgia, and most other markets where fix-and-flip deals are still profitable:

  • Re-facing kitchen cabinets
    Instead of replacing the cabinets, upgrade the fronts. This saves money and provides lots of design opportunities that make a property competitive when listed.
  • Installing hardwood rather than carpet
    In turnkey rental “flips,” investors often opt to install hardwood throughout to minimize maintenance and upkeep in the future. However, in a home to be sold at retail, putting hardwood in living areas and keeping carpet in bedrooms can minimize costs and maximize attractiveness of the listing.
  • Keeping things consistent
    Fix-and-flip operations functioning at scale offer buyers properties with upgrades that are known to be attractive instead of gambling on unique touches. Hardwoods, energy efficiency, and modern kitchens and baths are nearly universally attractive in any market and can be installed for minimal cost if an investor works with the same contractors consistently.

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