When I began my search for a fixer-upper, I connected with many people to learn the crucial steps. With no real estate or renovation background, the most important person for me to find right away was a realtor. While I worked with a few different agents, those who had renovation experience were most helpful. That knowledge allowed them to assist me in estimating renovation costs and also figuring out which improvements were necessary and which were not. Not every agent has this specific type of experience, so it’s essential to be willing to meet with a few realtors (or more) to find one who is the right fit.
Whether you have already found an agent or are looking for one, just know that is only one of several questions you should consider before purchasing that flip. Here are some areas to help you determine your next best steps:
1. Are you looking for a home that needs cosmetic updates or a complete overhaul?
There is a vast difference between changing out some flooring and paint versus removing walls and installing an entirely new kitchen or bath. For those considering the total overhaul route, you’ll want to prepare accordingly. These types of projects require more time, more crews, and more funding. There can also be more unexpected surprises, but in the end, you may find yourself with a higher profit.
For homes in need of cosmetic updates, you may find yourself with a slightly different type of challenge. These projects are typically a bit more challenging to find and may also be more expensive. Making sure that you don’t overpay and give yourself some breathing room for improvements will be vital to the success of this type of project. Think shorter timeline and smaller renovation budget too.
2. What is your all-in number for the house and the renovations?
This is the number that you are comfortable having invested even if things do not turn out as planned. If you are planning to do any type of renovations, that amount can influence the amount of money you will spend on the house. If you buy a house for $150,000 that needs $75,000 in repairs, your all-in number is $225,000. Even a house where you are just planning cosmetic improvements can add up quickly. Knowing what you will need to buy and what you will need to hire out for is essential. With materials, you can impact the numbers by doing a little research to find potential deals. One of my favorite ways to help a tight budget is to source items like flooring, cabinets, and even vanities at closeout or discount stores. Checking prices online is a great way to ensure you’re getting the best possible pricing for your materials.
3. How are you going to purchase the house, and are you borrowing for the renovations too?
An experienced and knowledgeable lender will be able to walk you through the various loan options. This will help you decide which may be the best fit for your situation. There may be down payment considerations, higher fees, and longer timelines for closing due to the increased complexity of the loans. You should also be prepared to provide a scope of work or a list of the repairs for the lender. Create a value that you believe the house will be worth after the renovations are complete. These steps are designed to ensure that the project and repairs result in the most desirable outcome for the borrower and the lender.
4. Who will inspect the home?
Homes can be secretive, and that’s where a good inspection can be valuable. Identifying areas of concern or items that may not have been at the top of your list. These items can help you make an educated and informed decision about the home. Just a note, a home inspection is not 100% absolute, so if there is an area of concern that the home inspection discovers ( i.e., electrical or foundation), it may be worth bringing in someone who is an expert in that field to further investigate.
Armed with these steps, you are well on your way to finding your own fixer-upper. Happy Hunting!
Ready to take that next step when it comes to flipping?
That’s why I’ve got additional resources to help you get the information you need to move forward on creating your flipping life.
Make sure you have the Fixer Upper Checklist so you know which areas are key to added value in a home.
There are several videos available on finding houses, renovations, and funding on the Threshold Homes YouTube Channel. Check out your favorite flipping topics and new videos weekly.
You can’t close a successful and profitable flip unless you start. What is your biggest challenge with getting started house flipping? Let me know. It may be an area I’ve also had questions about myself. I’m here to help so drop me a DM.
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