Flipping a house can be a very high risk investment, but if you know what you are doing it can be some of the easiest & fastest money you will ever make. People all over the place are putting away their briefcase and picking up their toolbox. All with hopes of fast cash.
First, you have to determine the type of market you are in. If you are in a slow market area, you need to be prepared to hold on to the property until it sells. Be sure to figure these extra carrying costs into your budget. Even consider the property as a rental property until you sell. That way you are making some money in the meantime until a sale. Any money coming in from the property is better than none.
The first thing that you want to do is obviously buy a house. You can maximize your chance at success by shopping in an up and coming area, but be scared to shop in the nicer areas for foreclosures and short sales. It is highly recommended to have a home inspection done before you buy so you know exactly what you are getting into and there are no surprises. That way you don’t get in over your head or overshoot your profit margin.
Once you own the house, a thorough walk through will reveal, in more detail, the work that needs completed. Concentrate on the kitchen and the bathrooms to get you best returns. Update the cabinets, change out the counter tops & upgrade the fixtures to make everything feel new and fresh. Be sure to check with your local municipal office to see if you need permits. If you need them get them, because you do not want to get shut down two or three weeks into your job. Then you have to worry about fines and other things that aren’t any fun. Not to mention the cost of not doing any work, this could cost up to $500 every day.
You will need to decide if the budget allows for reconfiguration for an open floor plan, or if you will leave the layout the same. Buyers in today’s market are looking for open floor plans, but it is not cheap to reconfigure and knock down walls. But sometimes that will guarantee a quick sale. All of these options need to be weighed before you start the job. Planning on the fly is never an ideal situation, especially with this much money on the line. So a structured plan will need to be created and adhered to.
You will have to decide if your going to go with granite counter tops or something cheaper. That depends on your market. Tile work on the counter tops is always nice and costs less than granite. You could always look at some inexpensive manufactured stone like Corian or others to get the stone look without the cost of granite. There are even some nice inexpensive things that you can do with laminate to give it that new look and feel. All of these things should be decided before any work is started. You can’t really start working until you know where your money is going to go.
The first thing to do is the demo work. This is the fun part. Tear out everything that you are not going to keep. Get a dumpster to keep on the property until you are done. This is at a minimal cost. Wood paneling and any other dated building materials should be pulled out and updated. That way when a prospective buyer walks through the door, they don’t feel like they went back in time. You want them to feel at home and comfortable in your property.
You should also pull out all of the old carpets and replace them because carpets hold odors. Most old houses however, usually have hardwoods under them, so that could save you some money. If they do have hardwoods under them they will probably need refinished, this is inexpensive and will get you the return your looking for.
If there aren’t any hardwoods under the carpet you will need to consult your budget to see if you have the money for hardwoods or tile, or if you are going to put new carpet back in. If you are flipping a higher end home you may want to consider travertine tile or something like that. Higher end buyers expect these things.
In the bathrooms, a separate tub and shower makes a big impact in a Master Bath. Also, it would be smart to put all new tiles in as well. If you don’t have a master bath to work with, you need to be sure that the guest bath is in tip top shape. The guidelines to follow are a nice floor, new counter top, new shower & bath. And don’t forget about the storage, there needs to be sufficient storage in the bathroom, so make sure this is addressed.
The work that you do in the kitchen can make or break your job. You want the kitchen to be very pleasing to the buyers. A nice floor and counter top is number one. But you also have to worry about the cabinet space and the way they are all set up. You want everything to flow nice and you need to be able to work in the kitchen. And too many cabinets is better than not enough. If they are there they get filled up.
Also having the kitchen open is a popular thing these days so people can entertain while they are in the kitchen. Although a lot of older homes do not accommodate these plans. You will need to check for load bearing walls before taking any walls out.Be sure of what you are getting into ahead of time. A common mistake made is cheap appliances. A little extra money here goes a long way. Buyers want to have new appliances if they are going to live there.
After all of these guidelines are followed, you can throw a nice neutral coat of paint on the walls, take care of any last detail inside and you are ready for the landscaping. This is an important step that goes overlooked all to often. Curb appeal is maybe the most important thing, because if somebody doesn’t like the outside, they are not going to look at the inside. So put some time to make it look nice. Pull out any overgrown trees and shrubs and just make it look appealing outside.
The last thing that I would recommend is staging. This will cost a little bit of money, but it is important that the buyer can picture their furniture in the house. Keep this to a minimum because you don’t want to overfill the house with furniture. Keep it basic and simple to maximize your dollar. Baking cookies and burning candles during the open house is always a good idea. Anything you can do to make a prospective buyer feel more comfortable is only going to help you sell the house and maximize your profits.