Interested in flipping houses after binge watching HGTV? You’re not alone! The allure of making an old, run-down house gorgeous and new again and turning it over for a profit is appealing to many people, said general contractor Pavel Rombakh.
“Flipping houses has certainly grown in popularity over the last several years,” Pavel Rombakh said. “We see a surge in this, but it’s important to know all about it because it’s not always as glamorous or quick as it appears on TV.”
House flipping is when a real estate investor purchases houses and quickly sells them for a profit. Typically, this is done in a year or less to be considered a house flip. Often, the house is purchased with the intention of making repairs and updates so the house can be sold at a much higher profit because of the work put into it. However, in some instances, houses are flipped in a growing home market and sold for a higher profit since the market is doing well.
“It is tricky to flip houses in a housing market that is improving, because it’s not always guaranteed,” said Pavel Rombakh. “When you remodel the houses you flip, you’re certain to make money when you resell the house because it has been fixed and updated, so the value has increased greatly.”
Flipping houses can still be risky, of course, if improving the house costs more money than you’re able to sell the house for. If the house’s foundation or roof are in disrepair, the costs can rack up quickly.
“Consult with a general contractor to get an idea of how much different kinds of repairs will cost, from hardwood floors to a brand-new kitchen,” advised Pavel Rombakh. “I always advise people to make a budget so they know what they can do and what they have to compromise on.”
Pavel Rombakh also suggested making small changes to the home that can make a big difference in how it looks and how fast it can sell. Some yard maintenance, fresh paint, new cabinets and hardware can go a long way and aren’t nearly as costly as completely redoing whole rooms of the house.
In addition to consulting a general contractor, Pavel Rombakh recommends speaking with a real estate agent for advice on the state of the market and the best options of houses to flip in your area. “This is one of those cases where getting a number of opinions is going to benefit you in the long run,” Pavel Rombakh said.
Discuss the repairs and finishes you’re planning with an experienced real estate agent who sells in the area. Some great looking finishes might have no value in certain areas (for example, pure gold knobs in “starter homes” would not impact the sale price).
Always plan to hit the market during its prime time. Sometimes it is worth it to pay more for a house just to get it ready for the best time to hit the market. “More often than not I see investors miss the market timing, even when they have done great remodels that have taken a lot of time,” Pavel Rombakh said. “I had a customer who could have sold her house in April of 2018 for $610,000 after necessary repairs and remodels, but she insisted on more upgrades hoping to get a higher price, got on the market in August, and sold it in November for only $535,000, even after spending more than $20,000 in additional upgrades.”