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What Is The Difference Between House Renovation And House Flipping?

Written by Posted On Thursday, 07 December 2017 09:22
What Is The Difference Between House Renovation And House Flipping? JohnHart Real Estate

Real estate business is a great way to make money but the market is also volatile considering that it requires a huge investment. A slight change in the economy can translate to big losses or gains depending on the type of shift in the economy.

Majority of the people who make money through real estate are the realtors and the house flippers. Realtors are the agents who act as a link between the buyer and the seller, their reward is the commission. The house flippers are those people who buy houses with an intention of reselling them within the shortest time possible for a profit.

In order to make some good money, there are renovations that are required in the house; they may be cosmetic or structural depending on the state of the house. If the house is in a habitable condition, cosmetic renovations that are focused more to add beauty on the house are important and adds more value compared to structural renovations.

Major differences between renovation and house flipping

In most of the times, the one involved in house flipping is not the original owner but renovations are mostly done by the original owner. They intend to make the house more comfortable to live in.

Flipping are innovations focused on a profit but house renovations by owner are intended to improve the status and habitability of the house irrespective of whether it will be sold or not. A house renovation can involve getting corner desks for a home office but this will be the last item a house flipper will consider.

Renovations are quality uplifting practices on a house and are not biased on either cosmetic or structural aspect, while flipping is mostly focused on cosmetic aspects of the house and even the renovations done on the house might not be quality nor long-lasting

House flipping renovations are restricted on the amount spent but renovations do not prioritize amount but rather the results. When results are achieved you stop spending, but in flipping, you stop spending when the marginal cost is exhausted.

House flipping can be illegal if the property is listed at inflated prices or used to secure house purchase loans that are way above its market value. More so if they are secured through fraudulent valuations and inspection reports that indicate that some renovations were done whereas there were none.

What you need to get started as a house flipper

A nice credit score to easily secure loans from the financial lenders.

Solid cash, a lot of it; imagine if you inject about $100,000 in buying a house and further renovating it with about $50,000 and then no one is willing to buy the house at the cumulated cost of more than $120,000.

You need an up to date state of the real estate markets to know what the market trends are and what is likely to occur in the near future.

Know when to buy and do it right; also know when to sell or continue holding. Take note of the time value of money and do not over-do the renovations.

Get all the correct estimates of the cost required to bring back life and glow in the house to make it the envy of the potential buyers.

Have excellent bargaining skills and know what in-house elements to look for that will warrant the biggest discounts.

Easy targets for a house flipper

Those houses that are under auction due to failure of payments

Tax indebted houses

Those that are on the verge of foreclosure by financial institutions

Old and un-kept houses

Off-season sellers, these are sellers that are doing it out of urgency


Despite the outlined differences between house renovations and flipping, it is worth noting that both are ethical practices if they are done within the stipulated guidelines. If the intention is not to defraud the buyer, flipping is a legal and genuine way of making money in real estate.

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Margaret Horton

Just a simple, single woman who is pre occupied with blogging, cooking, shopping and socializing. Working as Virtual Assistant and living a simple, beautiful effortless life.

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