The house at the far end of the boulevard looks like a place neighborhood kids dare each other to sneak into after dark. With peeling paint and gutters that seem to wilt off the house, it’s an unattractive buy at best. But buy it you did – and you know that it has far more potential than its creaky porch would suggest. The walls may need repainting, and the carpets replacing, but that work won’t take long. You’ve watched every episode of House Hunters; you know how house flipping works.
But as your time and money drain away, you begin to wonder, uneasy: Did you make an enormous miscalculation?
Renovating houses for sale is all the rage on reality television. Dirt-cheap fixer-uppers turn with seeming ease into beautifully expensive homes on-screen, and audiences wonder if they can turn the same profit as their favorite on-screen stars. Unfortunately, the numbers are against aspiring home-flippers. When Jason Cohen of Jason Cohen Pittsburgh strategizes, he always reminds his advisees that 12% of flipped homes sell at a breakeven or loss price even before calculating for expenses.
There’s no getting around it: renovating houses for sale is an expensive and risky venture for those with limited experience. However, Jason Cohen believes that if you are determined to give the investment your best effort, you should consider the following to make the most of your budget.
Estimate your expenses before the initial buy
Odds are, the house described at the top of this post wasn’t a lucrative investment. For all the buyer knows, those creaky floors don’t just need a new carpet – they need floorboards and rugs to boot. The curling wallpaper dismissed as a cosmetic fix could, when pulled back, conceal years of structural water damage. All told, the cost of rehabilitating the house added to the initial expense of the house could far outweigh any profit the investor makes after the sale.
Be thoughtful! Inspect the house and make a note of any repairs that need to be finished before the sale. Then, consider the market. How much do houses in the area sell for? Can you expect to reach that number? Pricing out your expected costs against your expected gains before buying will help you make an informed decision and prevent enormous financial miscalculations like the one outlined above.
Prioritize your repairs.
The unfashionable wall molding in the bedroom might need replacing, but the broken floorboard in the living room takes priority. Resolve the repairs that need to be completed to provide future owners with a livable space; then, if you have the money and time for it, resolve any remaining cosmetic issues. Hopping from problem to problem without any sense of order will waste your valuable time and resources.
Find a reliable contractor.
Make sure that you put in the time to check out potential contractors. It may seem a small step at the time, but it saves you considerable time and money down the road. Think of it this way: If you hire a hack contractor and end up firing him for poor work, you’ll need to hire a new contractor to both finish the job and clean up the mess his predecessor made. Save time and money by finding a competent contractor.
However, if you happen to be handy with power tools and know how to perform basic fixes well, you should invest the time in doing the work you can complete independently. Taking on a portion of the work yourself will lessen the burden of contractor costs and make your venture more financially feasible.
For more information and further advice, reach out to Jason Cohen directly at JasonCohenPittsburgh.com.