Home flipping involves buying bargain homes, fixing them, and selling them at a profit. When repairing and flipping houses, you want to be sure the property doesn’t leave you grappling with losses. For instance, a home that takes too long to close could leave you with losses. Timing is of the essence when home flipping, and the faster you flip it, the better for you. But can one build wealth by fixing and flipping houses? Well, let’s find out below.
1. Acquaint Yourself With The Local Building Codes
Before buying a fixer-upper home, browse through your knowledge of local building codes. The last thing you want is to purchase a house you can’t fix. For instance, the building codes are among the toughest in Florida, according to the Insurance Journal.
If your fix-and-flip home is in Florida, brace for some of the strictest building codes in the U.S. The rules are so tight in Florida because the state is vulnerable to hurricanes and other natural calamities. The more challenging the rules, the more expensive it is to fix and flip a home.
2. Inspect The Home
Buy a fix-and-flip home with all your wits together. Get a professional to inspect the house and identify areas that require minor and major repairs. Check if places like the kitchen or the bathroom need complete remodeling.
While a few warped or curled shingles are easy to replace, more extensive damage to the roof may necessitate a replacement. Proceed with caution if this is the case since roofs are costly to replace. Your goal is not just to sell the best home in the hood but to make a tidy profit as well.
3. Buy At The Right Price
The biggest mistake you can make when purchasing a fixer-upper home is paying more than it’s worth. Drive the price down as far as possible since you’ll profit from the margins. Research prices of similar fixed homes in the area before offering a fix-and-flip home. Between fixing stuff in the house and flipping it, ensure you don’t spend more than you need to, as going all out to finance a home beyond what it’s worth could leave you in the financial doldrums. This is a critical factor in building wealth through home flipping.
4. Avoid Unnecessary Upgrades
You may be tempted to go overboard with renovations and repairs, which is okay if you plan to move in. Install a hot tub if the house doesn’t have any. These are very popular, as evidenced by the 5.8 million hot tubs in U.S. homes, according to HotSpring.
However, if your goal is to become wealthy by fixing houses, you’ll need to sell as many as possible, and as fast as possible. You’ll need to attract many potential buyers to do this. Unfortunately, some upgrades, although well-meaning, can lock out a section of your potential market.
For instance, a swimming pool is good to have and will increase the value of your home, but it’ll shrink the pool (pun intentional) of potential home buyers. The key is to resist the temptation to splurge on new upgrades to avoid pricing the home out of the reach of potential buyers. Ultimately, to build wealth through home flipping, be extremely frugal and only finance what you must.
5. Spruce Up The Landscape
If there’s a place where grass must be greener, it’s in a fix-and-flip house! Here’s the thing: improving the value of a fix-upper home doesn’t have to cost an arm, at least not when all you need is to mow the grass, prune a few trees, and clear away hedges that make the place appear untidy and overgrown. Potential buyers will first be impressed, or turned off, by the home’s landscape: the neatly trimmed lawn, well-tended garden, the trees, flowers, sculptures, and all things beautiful.
You can hire a landscaping company to fix the landscape at a small fee. According to Realty Times, you can increase the value of a home by between 15% and 20% if it has a professional landscape design. Potential buyers will appreciate the extra effort and respond accordingly.
That you can build wealth through home flipping isn’t in doubt. However, you’ll need to be meticulous in choosing a fixer-upper home. Buying a home is a huge investment, and tying your finances in a fix-and-flip home can sometimes be scary. Aim to purchase a house that requires minimal fixing and sell it as quickly as possible. That’s the fastest route to building wealth through home flipping.