Figuring out your budget and renovations
Flipping a house involves risk. It also involves a decent reward if it goes well, which is why people do it. In order to successfully flip a house you will need to create spaces that add value and appeal to buyers. Every time I look at a house that I think has the potential to be a good flip project I ask these questions to determine the level of renovation and budget for the project.
What would this home sell for completely updated in this neighborhood?
Occasionally I will be able to find a house that has been renovated extensively as a comparable sale. If I can find one then I will use that as a measure for my project. If there is a size difference, I will adjust for the difference. Usually they are within a reasonable amount to be considered.
Are there any tear downs or houses that have been rebuilt from the foundation in the neighborhood?
Even though these houses may not be a direct comparable for the property I am planning to renovate it is a good sign if this type of activity is going on in the neighborhood. These houses will be the highest priced homes in the neighborhood. If buyers are willing to purchase homes at this price point, then that is a good indicator. If my project is priced 30% or more below that price and offers many of the same upgrades and renovations we should have interest from buyers.
In order to sell for x amount of dollars what would a buyer expect the home to have?
When deciding on the renovation budget I will look to the homes that have sold near the price point I am targeting. Did those homes have a master bathroom? A mudroom? High end appliances? If so, then those are items that I also make sure to include.
House flipping is a balance between creating a home that buyers will want and managing the expenses that go along with it without overspending. By knowing what features will add value while still staying within your budget you will create a house that not only meets but exceeds buyers expectations.
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Amber
So you’ve purchased a house to flip. Now what?
Check out my tips on how to get started when flipping a house.
Want to buy a property and renovate it?
I have a freebie checklist that will help you — 8 Things I look for When Purchasing a Home. Just click here to download it.
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