So many people have become fascinated with the idea of flipping homes, no doubt in part due to the variety of entertaining TV shows dedicated to the subject. I get it; in fact, I’m one of those people myself. But home flipping is actually a very tough business and I’ve seen more than a house or two linger on the market with disappointing results for investors.
If you’re evaluating a home as a potential flip, there is a lot to be said for the keep it simple approach. Here are five things to consider to determine if the property you’re looking at can work into a formula of buy-renovate-sell:
- Location. Everyone knows that location is paramount when it comes to real estate purchases in general; with flips, it’s nothing short of critical. When looking at a home with the intent to buy it, fix it and quickly sell it for a profit, always ask yourself is there anything about the location that’s giving you pause or causing you concern? If so, be careful: whatever gives you pause may give a prospective buyer reason to doubt the purchase.
- Broad Appeal of the Home. Location is key, but the property itself should also be broadly appealing. Homes with odd features are often not great candidates for flipping, because one of the fundamental aspects of successfully flipping homes is the ability to renovate, get to market and generate offers as quickly as possible. Think curb appeal and think broad appeal.
- Nature of Repairs. Has a home inspection confirmed that the renovations needed for the property are largely cosmetic in nature? There is a big difference between a house that is dirty, unsightly or stuck in the 80s, vs. a house that’s fallen into disrepair and is about to crumble to the ground. One is manageable and repairs can be efficient; the other means larger expenses, more time for renovations and the need for specialized trade skills. Most people aren’t up for the latter scenario.
- Contacts in the Trades. Before you buy any property with the goal of flipping, ensure that you have contacts in the trades that are ready, willing and able to help you repair the home. Think finding a great plumber, electrician or mason is easy? Think again. Skilled tradespeople aren’t easy to come by – and the good ones are busy. Make sure you’ve thought this part of the repair-and-resell process through and get your trades lined up.
- Financial Realities. When you buy a home with the intent to flip, there are so many financial considerations – purchase price, renovation costs, resale value and more. Be sure you are getting expert financial advice from start to finish, and don’t forget to plan for a nest egg in case things don’t go according to plan. (Hint: they rarely do with flips.)
These questions are really just the tip of the iceberg when it comes to educating yourself on the ins and outs of successfully flipping homes.
For more information about buying homes to flip, or about the Guelph real estate market, please contact me.
