Have you ever thought about flipping a house for the first time? Or maybe you’ve flipped a house in the past and something terrible happened. Now you want to know what other home improvement companies are doing and not doing.
Whether you’re looking to flip a home in Ventura, California, or a home in Las Vegas, Nevada, this Redfin article provides valuable tips to save you time and money. From choosing the perfect location to choosing reliable contractors to marketing your property, we can help.
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1. Consider location
When building a house, location selection is one of the most important factors. First, if you plan to be an active participant in the renovation process, you’ll want to make sure your commute is close. However, in order to assemble the right team (contractors, painters, designers, etc.), you also need to make sure that everyone working on the home has ready access and is not hindered by distance.
Now, from the perspective of selling real estate, location is equally important. Replacing your home in an area where demand for your property is active can make or break the deal. If you plan to keep your property as a rental, consider both short-term and long-term demands. Is it best to be located close to the city so that tourists have ready access to the hottest products, or is the home a quiet retreat in the wilderness, away from the hustle and bustle of the world?
Rui Wang is the Vice President of Marketing at Ark7, an online platform for fractional real estate investing. She recommends having a rental property near the city center. This increases occupancy and makes it more accessible to travelers.
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2. Budget accordingly
When it comes to flipping houses, numbers matter. If you spend too much money, you will suffer financial losses. On the other hand, if you reduce your spending, you may have a harder time finding tenants or buyers.
Real estate finance guru BiggerPockets talks about the importance of calculating after-repair value (ARV). How much will the property be worth after repairs? To determine a property’s ARV, you need to know its current value and the value of renovations, and perform a comparable market analysis (CMA). A good rule of thumb to help you along the way is the 70% rule. This means you can’t pay more than 70% of your ARV minus the cost of necessary repairs.
Konstantin Podyachev, CEO of Expo Home Buyers, recommends having a 10-15% buffer for unexpected expenses. These costs can be incurred throughout the renovation process. The last thing you want is to suffer financial hardship. In the best case scenario, everything goes as planned and you keep 10-15%.
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3. Consult a real estate agent
Even before purchasing a home for renovation, it is a good idea to consult a real estate agent. Agents have extensive knowledge of the area in which you want to purchase and can guide you through the purchasing process. It’s essential to understand what you’re getting into, starting with learning about recently sold or rented homes that match your vision.
Additionally, assembling a team of contractors, designers, appraisers, and inspectors can be difficult. Having a real estate agent as a guiding resource to connect with those individuals can be a step in the right direction.
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4. Don’t think your plans won’t go awry
When you begin the process of renovating your home, make sure you have a solid plan in place. But don’t expect it to stay this way. If you plan to reconfigure your layout by knocking down walls or ripping out beneath the floor surface, you never know what you’ll discover.
Termites, asbestos, mold, and other unpleasant and plan-ruining things can be found in plain sight. Before you buy a property, do your due diligence and have an inspector inspect the home. Everything from sewer and water pipes to foundation and structural integrity will need to be inspected.
Bobbie Wasserman, founder and CEO of Single Lady Estates, says she calls in a professional if she has concerns. “Their insights give you a comprehensive understanding of the current state of your home’s critical (and expensive to repair) systems.”
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5. Don’t cut corners, but don’t overdo rehabilitation.
The contractor’s lowest bid is always attractive. But before you make a decision, make sure you ask to see someone’s portfolio of work (perhaps even a tour of their current projects). Another helpful tip is to read reviews or connect with people you’ve worked with before and hear directly from them how well they executed their vision.
Will Rugeley, marketing manager for Good Vibes Homebuyers, says in 2020 their team bought a home for $15,000 and sold it for $143,000, at a loss of $8,500. This happened because they selected the contractor with the lowest bid before vetting it. Based on early estimates, Will and his team were significantly over budget as expenses continued to accrue. He now advises “be wary of oddly high or low rehab estimates.”
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6. Consider design
We considered the location. Now comes the fun part, time to create your home design. First and foremost, decide whether you want to design it yourself using home design software like Cedreo or hire a professional interior designer.
Designing a home as a short-term rental (like Airbnb or VRBO) can be very different from creating a home for long-term rental or sale. For short-term rentals, Wang suggests creating each room into a “functional oasis that provides guests with both essential amenities and maximum comfort.” This is reflected in Ark7’s Seattle D1 property, where the blue exterior and tall trees seamlessly complement the warm, quintessential interior.
When designing long-term rentals or real estate sales, the adage “less is more” may be helpful. We encourage prospective buyers and renters to consider viewing your wonderful selection of properties. You want them to imagine life at home. That life might mean leaving room for an accent wall, or taking inspiration from what you’ve already designed and offering a higher price tag for added features.
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7. Don’t forget marketing
After pouring your heart and soul into designing the perfect property, the last thing you want to forget is marketing. Your real estate agent will be your greatest asset in showing your home to potential buyers and renters.
The experts at Old Pueblo Stucco caution you about creating curb appeal that makes you think “wow” at first glance. Hire a photographer or videographer to capture the best angles of everything that makes your home unique. Additionally, make sure you (or your agent) are writing compelling copy that sits at the heart of the property description and highlights all the best features.
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Final thoughts on the do’s and don’ts when flipping a house:
Flipping a house may seem like a daunting task. Remembering the essential parts will serve as a guiding light from beginning to end. Learn from people along the way, consult experts, and continue to rely on online resources when you need clarification.
Beyond the challenges of “do this” and “don’t do that” and the windy road lies an amazing experience of what will bring your work of art to life.
