You can tell a lot about someone’s experience in this industry by asking them how they would flip a home. In fact, this is one of the best ways to judge just how knowledgeable someone is on this subject and whether they are an amateur who has just taken their hobby to the extreme or a professional who will be set to make a profit.
There a a few things that the former category that always standout to me, mistakes that people in this group always make. They are:
Non-Structural Changes
There are times when a home could use a little sprucing up. For the most part, you should look to spend as little more as possible on changes that are not structural. After all, whatever you put in could be taken out by the buyer and any prospective buyer will understand that they are buying the home, not the decor.
There are exceptions to this rule though and it is these exceptions that many first-time flippers get wrong. A key area in all of the homes I have flipped is the kitchen. It is amazing how much someone’s perspective of a home changes just because it has a modern kitchen. Obviously, unless the current setup is terribly dated, you shouldn’t buy new units, but a little cleaning, sanding and varnishing often suffices.
The same goes for the bathroom. I remember selling a home to a family based purely on a very extravagant bathroom. The fixtures and fittings were already there as it was an old home and had all of that historic beauty. I simply polished it up, modernized it and turned “historic” into my own version of “retro”. They hated the house the moment they walked in so the first room I showed them was the bathroom and that set the tone for the rest of their visit.
Build for the Market
There are exceptions to the bathroom and kitchen rule and that’s if you have a project that is just 1 or 2 rooms in an area that caters mostly for single residents. In that case, no amount of money spent on the bathroom or kitchen will give you a decent return.
It’s always essential to renovate with the market in mind, whether the area is for wealthy families, students or people living on their own. All have different needs and if you decide to make a rundown home in a rundown area grand enough for a rich family, then you’re just going to lose money because that family won’t live here.
Do Deals
It always helps to get into this business if you have some sort of building experience. You can cut all kinds of corners and save a small fortune. But you don’t need it. I certainly don’t have it. All you need is a dedicated team, someone willing to provide you with discounts, and a willingness to get hands-on.
I work with a local building company who always provide me with a team of workers should I need them. I also work with a company that specializes in remodeling who provide me with cut-price materials. In return, they get someone who will always have order sand will always have work.
So, if you’re going to get into this business, do some deals and make sure you’re not paying premium prices for the stuff you’re going to need on every project.
