A few years ago, it was common in many markets for real estate investors to buy houses, update or repair them to bring them current to buyer's tastes, and sell at a profit a few months later. For most markets,
those days are gone. The problem with flips (and flippers) is that they were primarily in the get-rich-quick game-which may work for a while, but doesn't last forever. You can still make money by applying some of the principles touted on HGTV, TLC, and the like, but it's a slower path to your payday. I call this strategy a "slow flip".
In earlier posts, I covered the concept, finding your property, change ideas and your budget. Now, some suggestions and cautions to help your project be profitable and rewarding.
Know Your Limitations - we've all seen the TV shows where unsuspecting flippers think they will totally renovate a house in 2 weeks. Two months later, they are ready to throw in the towel. If the most complex home improvement task you've accomplished on your own is installing a ceiling fan or changing a light bulb, you might need to plan on hiring contractors for most of the work - that will have a major impact on your budget, so be realistic.
Realistic Timeframes - if you're doing the work yourself on weekends and after work each day, be sure you understand what you're getting into. If it's near your work or home, you'll have a greater chance of success; if it's an hour out of your way, that's two hours a day just traveling to and from your project, the only time you'll be able to get any real work done is on the weekends. Also consider the impact on your personal life and your relationships with the people around you-as you start to run out of time, you'll not be fun to be around. If you're brining in professionals to do the work, be sure there is enough time for them to get the job done and monitor their progress so one contractor's delay doesn't cause a delay for everyone else down the line.
Shop Around - although your local home improvement stores may have good prices, consider checking the internet for bulk pricing. You may spend $12 for a paddle style (handicap friendly) door knob at a local store, but if you can get that same door knob for $7 delivered, when you're replacing 20 in the whole house, that's a savings of $100. Every little bit helps in a big project.
Don't Forget About Sales Tax - if your state has a 5% sales tax rate, on a project that includes $10,000 of materials, that's an additional $500 - it all adds up, budget accordingly.
Check Out Your Contractors - a general contractor coordinates all the other contractors on the project. If the plumber and electrician are still running lines through the wall, the drywall can't go up yet, so the painting can't begin. If you are acting as your own general contractor, you've got to make sure everyone is on schedule or the whole project will get off track. Make sure you check references for your contractors - are they going to meet deadlines? I've had contractors who were full of good intentions and would have come back for four months if that's what it took to get things right, problem was, every day they were taking was costing me money because I couldn't move in. I had to hire an additional crew to come in and get the project back on schedule.
Plan The Order Of Things - if you paint the walls before you install your new flooring, you don't have to worry about getting paint on your new floors. If you have your countertops delivered before the cabinets are installed, you've got nothing to mount the countertop on yet. If you install the wall cabinets before the base cabinets, you can get in position to install the wall cabinets more easily. There are a variety of books you can read to order the tasks of your overall project appropriately, but a little common sense and thinking it through before you begin can help too.
Hopefully these posts have been informative and will be useful for you. There is still money to be made in flipping houses, but it's easier to make that money by taking it slowly, finding the right house, and enjoying it yourself for a few years while it builds more equity. When it comes time to sell, you can price it 2% below market and sell quickly in any market because of the upgrades you did that make it stand out above the others. For an example of one I did, see www.5116CondorStreet.com
For answers to all your residential real estate questions in Hampton Roads,
Contact Drick Ward - Exit Realty Central
757-227-9007
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