With the popularity of TV shows like Flip or Flop, House Hunters, Million Dollar Listing and Property Brothers turning every bored grandma and recent college grad into a budding house flipper, it’s more important than ever to share our knowledge on what works, and what doesn’t.
In this report, we’ll tell you what you should fix — and what you shouldn’t — to minimize costs and maximize profit.
As a bonus, we’ll also share our top tips on how to cut down on your costs.
But, first, the awe-inspiring stats (from ATTOM Data Solutions): in the first quarter of 2017 alone, there were 43,615 single family homes and condos flipped, accounting for almost 10% of all homes sold; across all markets, flippers averaged a $64,284 gross profit.
Indeed, buying, rehabbing and reselling a home to earn a profit is a legitimate way to generate income. However, if you don’t do your due diligence, you could lose your investment, or worse.
What to Fix when Flipping
Especially if you’re a first-time flipper, look for quick-flip opportunities: cosmetically challenged homes that you can beautify and sell without a huge investment of time, effort or money.
- Not all renovations add value.
- You never want to spend more on your renovations than the property is worth.
In other words, before building a tennis court, install a strong, stately front door and manicure the front lawn.
Hint: make sure you research how much other homes are selling for in the area, as well as which homes sell the fastest and what they may have in common.
Refer to this checklist when you buy your fixer-upper, and avoid jobs not on this list.
Exterior (Curb Appeal)
One thing all the aforementioned TV house-flipping shows have in common is that they (almost) always show the potential buyer’s first impression when arriving at the property. Why? Because people do judge the house from the outside, and a negative first impression is hard to undo. What’s the lesson? Perfect your property’s curb appeal, so the buyer is excited to see what’s behind that exterior.
- Trim tree limbs and shrubs.
- Mow and edge the lawn.
- Replace dead or dying shrubs and plant flowers, especially near the front.
- Apply a fresh layer of mulch.
- Remove clutter and eyesores.
- Fill driveway and walkway cracks.
- Power-wash the siding, tuck-point a brick home, or paint a wood-sided home.
- Repair or replace windows and screens.
- Add or replace shutters.
- Paint the front door and trim.
- Paint the garage to match the house.
- Replace the gutters. Install splash blocks or gutter extensions.
- Replace the front and rear storm doors.
- Replace exterior light fixtures.
- Replace the mailbox, choosing a color and design that fits in with the neighborhood.
- Scrub everything.
- Wash the windows.
- Install new window blinds.
- Clean or replace any drapes or curtains.
- Remove hooks and nails from all walls and patch the holes.
- Apply a fresh coat of paint to all rooms, using flat, neutral colors for the walls and semi-gloss white for the trim.
- Check and repair all doors and doorknobs. Doors should open and close effortlessly.
- Install new light switches and outlet cover plates.
- Install new smoke detectors.
- Replace the thermostat and doorbell.
- Re-carpet, refinish, or replace damaged or worn flooring.
- Swap out the register covers.
- Replace exhaust fan covers and fans.
- Install a new stainless steel sink.
- Install a new faucet.
- Replace countertops, as necessary.
- Refinish the cabinets, if needed, and add new knobs and handles.
- Apply new liner to all cabinet shelves and drawers.
- Install a new vanity.
- Install new fixtures.
- Replace the toilet seat.
- Replace old towel hangers.
- Replace shower curtains or install glass shower doors.
- Apply fresh calk around the edges and base of the tub or shower, sink and base of the toilet.
- Scrub the grout between tiles.
- Sweep the cobwebs out of the rafters.
- Dust off ductwork, pipes and wiring.
- Tack up any dangling cables.
- Seal all cracks in the walls.
- Whitewash concrete or cement-block walls with sealing paint.
- Paint the floor using gray enamel paint.
- Install new glass block windows, if necessary.
- Add insulation between the joists and where joists meet the outside wall.
- Change furnace filters.
- Clean or replace the hot water tank.
- Repair any leaky faucets.
- Unclog any plugged or slow drains.
BONUS: How to Cut Costs when Flipping
- Don’t hire a designer. If you need help, get it for free from the experts on staff at your local home-improvement store.
- Don’t hire a large construction company. Look for moonlighters (the employees of many of these companies moonlight on the side; you can find them at nearby construction sites), and hire students over the summer.
- Schedule off-season work, when larger companies need to keep their employees busy in order to pay them and finance their benefits, and use this knowledge to bargain for better pricing.
- Pool your projects. Since most skilled laborers charge a minimum for just showing up, draw up lists and have them complete all projects in one trip. And, if you’re fixing and flipping multiple houses at once, ask the contractor to consider a multi-project discount.
- Don’t buy the hottest offerings on the market. When sourcing building materials, buy overstocked/discontinued, builder’s grade or remnant materials. Simply ask the salesperson or manager to direct you to the more affordable options.
- Buy time-saving power tools, including:
- Heat gun for stripping wallpaper and paint
- Power washer to clean everything from decks to siding
- Power roller for painting inside walls and ceilings
- Cordless drill with a well-stocked drill-bit case
- Screw gun with Phillips and flat-head screw bits
- Circular saw for decks and other woodworking projects
- Reciprocating saw for cutting anything you can’t cut with a circular saw
- Nail gun for quick and easy single-handed nail driving
- Vibrating or belt sander for sanding out scratches and gouges in wood surfaces
- Rent a large dumpster for all the work, and ask all your hires to remove the cost of waste removal from their estimates.
- Charge purchases on a rewards-back credit card. If your building supplier offers its own credit card, you may get a discount on all purchases. If not, shop around for other cards that may offer cash back, travel miles, etc.
Need more help? Looking for your first property project? Contact us today, and we’ll help get you started.