House Flipping 101: Save Money without Sacrificing Quality
The more houses you buy, renovate and flip, the more you learn. Experienced investors can get the repair and upgrade work done efficiently and affordably while making sure things are done professionally. When you buy a house with the intention of fixing and flipping for profit, there is always a fine line you need to walk. The more you do house flipping successfully, the more you find your ideal balance between cost and quality.
Don’t Spend More than You Need to
Many first-time flippers go way overboard. They hire the best contractors in town. They buy the most high-end building materials. They take more time to make sure every single detail is perfect. This is a great plan if you are buying and renovating a home for yourself. If you plan to live there and make it your dream home, then of course you want to invest all the time and money to do everything just right.
Experienced investors will not need to be so frivolous with the building expenses or make upgrades that aren’t really going to impact the resale value of the property. You’d love to add a crystal chandelier to the entryway and a built-in Sub-Zero fridge in the kitchen, but are these extravagant features really necessary?
Know the Market and its Buyers
How much you should spend will depend partly on the overall value potential of the house and the market itself. For instance, if you are fixing and flipping in a low-end neighborhood, you want the work to be done properly to pass inspection and to maximize the resale value. However, you don’t need to go too crazy with the upgrades and construction materials. Meanwhile, if you are redoing a home in a high-end market, you will want to invest more time and money. You will want more expensive building materials and those extravagant upgrades may make more sense because they can bring more profit.
Focus on What Matters Most
Just remember when it comes to décor and upgrade, you want to keep things neutral. This is often the biggest mistake novice flippers will make. They rebuild the house in their own style and this can actually make it harder to sell. The buyer may not want certain colors, materials, textures or upgrades. They will likely want to come in and add their own style to the home.
Focus on the structural elements and living spaces as much as possible. Of course you want to make sure any construction work is done well and looks good, but don’t get hung up on superficial things that may not matter to most buyers. You can spend thousands installing the nicest carpet, only for the new owners to replace it because they don’t like the color or they want to install their own laminate or wood flooring.
You might be able to save money hiring workers who are moonlighting or by doing the work yourself. DIY flippers will want to buy their own power tools and equipment rather than renting. It’s more of an upfront expense, but you will save a lot of money over time when you own your own tools that you can take from house to house.
You can use builder’s-grade construction materials, pre-fabricated features and remnant materials (trim, carpet, flooring, tile, countertops, backsplashes, etc.) to save some cash while still making sure everything looks nice. At the same time, you don’t want a mish-mash of materials that don’t flow together. You can save money if you are smart about what materials you purchase.
Finding Balance Between Cost and Quality
Ultimately, you want to find the right balance between quality work/materials and staying within a set budget. If the final selling price is less than the cost of the property and the renovation together, then it’s a losing investment. You definitely want to project your construction costs before you buy the property and have a strong plan going in. If you are just “winging it,” you are not likely to see a great return on investment (ROI) with house flipping.
A well-done fix and flip will bring with it plenty of profits. You want the property to look great and be completely move-in ready. You just don’t have to break the bank by doing more than what’s needed. Keep things neutral so the buyer can make it their own and minimize the extravagant touches that aren’t really going to increase the resale value that much.
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