How much work will you put into the renovation, and will it be worth the cost?
Once you’ve found the inspirational property, you’re ready to begin the deep dive into your project. What exactly have you gotten yourself into?
If you’re the type who flips houses you enjoy the challenge of projects and the thrill of sales. When we are identifying the right house for a flip, this is the intersection we aim for: simple to update, easy to sell.
Small scale fix-ups: 3 things to remember
If you’re new to house flips, you’ll want to start small.
1. Keep the project manageable: Managing a large team of people to get the job done would be monstrously stressful. When you’re looking at a house for a flip, a manageable project looks like a paint job, flooring, switching out cabinets, etc. These are surface fixes, and most likely ones that you can do yourself. The cost of this type of house flip will be minor compared to a complete renovation, usually keeping the project around $25,000 and under.
2. The more people involved, the more things that can go wrong. Pursue a house flip in your neighborhood or close enough you can drive by for an afternoon. If it’s this close by, you can work on the project as you have free time. If you choose to hire out subcontractors, try to find people you know or those who come recommended. By keeping the job locally, you can save time and money by visiting the property regularly, doing some work yourself, and partnering with those you are familiar with. If anything goes wrong, it’s easy for you to get to the house quickly and call up your friends.
3. Make sure you know your limits. Start by identifying your skillset and your strengths. Are you great with the real estate realm, but not so much demolition? Do you enjoy painting and cleaning, but you’re intimidated by laying tile? When you can be honest with yourself about your limits and skill set, you can know which parts of the house renovation are for you and which projects to source elsewhere.
Large scale house flips: 3 takeaways
So you’re experienced and ready for the big project! Once the renovation gets large enough, you’ll have to start hiring out large contract teams to complete the job.
1. You will most likely want to hire a project manager. Hiring a project manager will free up your time from the minutiae of a project – leading you to be free to take on more house flips! If you are managing all the details of a large renovation, you’ll probably miss deadlines and budgets. While hiring a project manager may seem like an unnecessary cost upfront, they will most likely end up saving you money down the road.
2. Show the house yourself! This is the fun part. The money you spend on a project manager can be made up for in the margins you make by showing and selling the house yourself. Plus you get to be proud and tell the story of the project! Removing the added cost of someone else showing your house can make a large difference in your profit margin by the end of the renovation.
3. Know your audience. Who will you be selling to? This can make a large difference in the final big cost of the project. If you’re looking to sell to a landlord or the property is in an area full of renters, you typically do not need to put in flashy features. With tenants moving in and out, you need durable but standard basics for the home. If you are most likely going to sell to a family, expensive upgrades will be key for selling points.
Know what you’re in for and willing to do for a house flip upfront. This can save you money and time down the road! Whether a large renovation or a small project, identify what works best for you and your latest inspiration.