When we look for a flip house for our real estate investing business, Tarek and I basically go through the same thought process that anyone goes through when they buy an investment property.
Even though we’re working on a shorter timeline than most homeowners, the journey is essentially the same.
Understanding our thoughts as we go through each step of the process might give you a clearer road map for your own fixer-upper journey, or it might inspire you to test the waters of real estate investing yourself.
Finding a great deal on a property
If you’re looking for a really great deal on a fixer-upper house, you’re going to be searching for a diamond in the rough, and that’s exactly what we do.
We drive around the neighborhoods where we’re most likely to find great flip houses. We search through the MLS. We take a look at listing sites like Zillow.
We basically search high and low, and as we find potential deals, we start doing research on them, just like you would with your home purchase.
There’s something really special about finding a truly great house-flipping opportunity, and it always gets me a bit excited and a touch nervous at the same time.
I don’t want to fall in love with a house before the seller accepts the offer. Yet, at the same time, I can’t help but think about how we’ll be helping someone get out from under a financial burden, and then benefiting the whole neighborhood with quality rehab work.
The rush when a seller accepts your offer
After we find a house that has the potential to be a really fabulous flip property, we make the offer and hold our breath.
When the seller accepts the offer, I get a real rush! I immediately start thinking about when we can get inside, look at what the house needs, and get to work.
Before long, I have visions of beautiful design work floating through my head. In some ways, this is my favorite part of flipping a house, because it seems like the sky is the limit.
I think of everything I’d want to do to it if I had the money, but then – just like if I were buying a fixer-upper to move into – I have to bring myself back down to earth and remember our budget.
And that leads to one of the scariest parts of house flipping or buying a fixer-upper.
The fear when your contractor tells you …
Whether it’s a whole new roof, new electrical wiring, new plumbing, or any other major project, when one of our contractors tells me that they need to do a really expensive job that we didn’t budget for when we bought the house, I get a little bit scared.
Before I know it, numbers are running through my head, and I have to take a step back and think about how much of the budget is going to be taken up by this surprise.
Then, as I get things in perspective, I look for places where we can save money and places where we can still splurge some to get the best results possible.
Sometimes you have to go a little bit over budget to get the job done, but as long as you don’t eat up your entire margin, you’ll be fine.
For Tarek and me, this is a matter of how much money we can make on a house flip. For a home buyer, it’s a matter of how long renovations are going to take, when you can move in, and what needs to wait.
In either case, we’re looking at some financial challenges, but they shouldn’t be impossible to work around.
Deciding where to spend and where to save
Some of our house flips are in neighborhoods where you absolutely need real hardwood floors and marble countertops. In other areas, we can get away with high-quality laminate floors and quartz or another less expensive countertop material.
Whatever the case, I never use materials or appliances that I wouldn’t be happy with in my own home.
That doesn’t mean that I splurge on every little thing, though. I look at the places where a less expensive option will still create a beautiful finished product, and I go with those.
I also prioritize some rooms over others. For example, as you start your renovations, are you going to want to redo the kitchen and master bath first, or will the guest bedroom and living room take precedence?
Kitchens and bathrooms are the easiest places to make upgrades and create luxurious settings for home buyers. That’s why I recommend doing these spaces first for your fixer-upper, just like we prioritize them for our flip houses.
Watching it all come together
After we’ve figured out the budget and worked out what needs to be done with our contractor, it’s time to watch it all come together. In a surprisingly short time, we get to watch a distressed property transform into a beautiful, totally livable home.
It might take a little bit longer for you to do all of the work on your own home, but the process is the same, and it’s really satisfying to watch your plans become reality.
Selling a house to excited buyers
We sell our houses right after we rehab them and you might live in yours for years, but, again, the outcome is the same.
After we put a lot of hard work and energy into a flip house, we get to sell it to an individual, couple, or family, and they’re always really excited to move in.
We get to see their dreams come true as they buy their first house or their next house. When you sell your fixer-upper, it’ll be your buyer’s dream house, too.
When you look at it this way, house flippers and fixer-upper homeowners can learn a lot from each other!
Lead photo courtesy of Zillow Digs.