Plenty of real estate investors have made a handsome profit finding, fixing, and flipping homes. However, being successful at flipping homes means doing your homework. There are a number of factors that need to be considered before you determine whether a specific home is worth investing your time and money on. Location is definitely the most critical factor to consider – you want to make sure the area is a desirable one to buyers. However, there are also aspects of the property itself that you should analyze before diving in.
If you’re thinking of flipping for a profit, make sure the property you buy exhibits the following traits.
You can redo every room in the house from top to bottom, but if the building not structurally sound, you’re asking for trouble. When scoping out homes to potential fix and flip, pay close attention to the foundation and the attic. Identify any potential issues, such as cracks in the foundation wall, sloping of the flooring, and moisture in the attic.
If the home’s structure isn’t sound, it doesn’t matter how pretty you make the place. Bringing the structure back up to par can be a very expensive endeavor that can really eat into your profits. If the home’s structure is sketchy, keep looking.
Not Too Large
When it comes to fixing and flipping, the idea is to get in and get out as quickly as possible. The longer it takes to rehab a home, the more your carrying costs will add up, including mortgage interest, property taxes, home insurance, and so on. One of the things that can cause a renovation to take a long time to complete is the size of the home. Ideally, the home shouldn’t be much larger than 2,000 square feet to help keep the time frame down to a minimum.
Good Floor Plan
If you can find a home with a floor plan that allows for optimum flow and function, it’ll be a lot easier to work with. Potential buyers will look at the layout and floor plan of the home before they decide whether it’s worth putting in an offer on the place. Today’s buyers are typically looking for a floor plan with rooms that are open to adjacent ones.
Buyers are usually looking for homes with kitchens at the back of the house for easy access to the backyard, a large master bedroom with its own ensuite bathroom, and a laundry area that’s large enough to do all the folding and ironing. Even if the home you’re looking at isn’t exactly laid out this way, make sure it allows for minor adjustments to be made in order to end up with a floor plan that buyers are looking for.
Kitchens That Can Be Enlarged
The kitchen is the heart of the home, and as such, it’s one of those spaces that can add a great deal of value to a property. If you find a home with a kitchen that’s already on the large side and is well laid out, great. If not, determine whether or not there is any opportunity to knock down any walls to open it up and enlarge it.
This will not only provide more space in the kitchen, it will also open the entire floor up. Identify if the dividing walls are load-bearing or not before making plans to tear down any walls – non-load-bearing walls are much easier and cheaper to remove.
Space to Add Another Bathroom
Buyers typically want more than one bathroom in a home. If the house you’re looking at only comes with one bathroom, identify whether or not there’s space to enlarge it, or see if there is any room elsewhere in the home to add another one. Cosmetically speaking, it doesn’t take a lot of effort or capital to spruce up a tired looking bathroom. But if enlarging or adding another bathroom is on the agenda, make sure the space in the home allows for it.
These days, buyers want hardwood floors. Wall-to-wall carpeting (aside from the bedrooms) or linoleum floors are out-of-date, and can even look cheap. The home you buy doesn’t necessarily need to have hardwood floors – you can always have them installed after the fact. But it would be a lot cheaper if hardwood already exists. All you would need to do is sand them down and stain them in order to make it look like they were recently installed.
The house itself matters, but so does the lot it sits on. Unless you’re fixing up a condo unit or even a townhouse, most buyers will likely want their home to come with a decent-sized lot. Not only that, it should be an ideal shape and be relatively flat. Rectangular lots of sizeable square footage and minimal sloping are easier to sell compared to odd-shaped lots with little space.
The Bottom Line
The effort you put into your fixer-upper is obviously a critical component to a successful flip, but there’s only so much you can do with what you’re working with. Give yourself the highest chance of success and profit and choose a property that meets the majority of the above criteria.