After careful consideration—and hundreds of Flip or Flop episodes—you’ve decided you’re ready to conquer your first reno. It’s time to create that flipping a house checklist. But where to begin? We have you covered like a remodeled roof.
The residential real estate market is positively piping hot. Recognizing the income potential, DIY’ers and novices believe they have a flair for flipping. In 2017, over 207,000 single-family homes and condos were flipped. Investors are earning a tidy sum on their purchases, with the average ROI topping $68,140.
Tarek and Christina make it look easy, but there’s more to flipping than meets your HGTV-obsessed eye. In order to avoid a flipping failure, use this step-by-step flipping a house checklist.
1. Set your Budget
At this point in your residence rebuild, you should be used to running numbers. While it’s not fun to think about, determine the amount of money you can afford to lose on your flip. It’s always best to budget for the worst-case scenario.
Here’s a breakdown of what your overall budget will look like:
Finally, set a 20% goal for return on investment.
2. Pick a Property
Stretch your beginner’s luck—scour properties in close proximity to your house. You know your neighborhood, which will give you a leg up when picking a property. You can also explore an up-and-coming area. Set up alerts on websites like Redfin, RealtyTrac, Zillow and Auction.com.
It can be hard to distinguish profitable from money pit. Here’s how to avoid a house with too many projects:
Use a company like BuildFax to get a detailed home report for less than $40. Think of it as a pre-inspection.
3. Prioritize Projects
Consider the rooms that need the most work. There’s a difference between nice-to-have and must-have. Quartz countertops are swoon-worthy, but proper plumbing is a must. After your inspection, conquer the requirements before you go crazy creating that open-concept kitchen. Once the boring stuff is out of the way (no offense, electrical codes), prioritize the cosmetic projects.
Research which reno tasks will give you the biggest ROI. For example, simply painting a door can add $6000 to your resell value! Don’t be afraid to enlist the advice of your realtor, contractor, inspector and appraiser.
4. Rebuild with Buyers in Mind
Remember, you’re not the one that’s going live in this house. Base your design on what will appeal to potential buyers—rather than your own tastes. Though every buyer is different, there are some commonalities when it comes to upgrades.
Start by picking paint colors that go with everything—like whites, grays and beiges. Hardwood floors are in high demand, but they also come with a high price tag. Explore options like waterproof vinyl or wood-look tile. These floor replacements are low maintenance, durable and look just like the real thing.
Purchasing a home is one of the biggest financial investments people make in their lifetime. They will look for any opportunity to cut costs in the long run. Which is why it’s no surprise that 90% of homebuyers want energy-efficient appliances and windows.
Good things take time, and home flips are no exception. In fact, it takes an average of 182 days to finish a flip. Channel your inner Zen and treat each project as a learning opportunity. Here’s to graduating from flipping virgin to renovation royalty!
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