Considering Going All In for a Fixer-Upper? Here’s What You Need to Know Before You Do
Fixing up and flipping a property is a popular trend many entrepreneurs are buying into nowadays, mainly because of its lucrative profit-earning potential. Furthermore, many ‘flippers’ will agree that it’s one of those projects that’s worth seeing through to the end because you’ll undoubtedly be proud of all that you’ve managed to accomplish in such a short space of time. If you’re already sold on flipping properties, Larsen Insurance provides what you need to know before you get started.
How to select a feasible fixer-upper property
When selecting a fixer-upper, not all properties will be feasible in terms of profitability. While some may look great at first glance, it can be deceiving if you haven’t done the necessary research. Moreover, not investigating properties can lead you into a lot of financial trouble. Here are some things you should look into.
Location matters a great deal
As is generally the case with the housing market, location matters significantly when it comes to your return on investment when you eventually sell the property. As a general rule, the more upmarket the area, the more profit you’re likely to make when closing a deal (provided you’ve worked out the profit margin correctly).
It’s wise to investigate current home trends when evaluating properties. Knowing what desirable features a home already has, and those that can potentially be added, can help you separate the best candidates for flipping from those that leave something to be desired. Having several desirable features will make your flipped house more attractive to potential buyers.
Try to keep renovation costs as low as possible
Indeed, your main aim will be to make as much profit as possible when you flip the property. However, renovation costs can quickly eat into your profits if you’re not careful. Therefore, you’ll want to ideally choose a fixer-upper that needs mainly superficial renovations if you're going to keep costs as low as possible.
What not to buy into
There will be specific properties that will be a no-go from the very start. These include fixer-uppers that don’t have a sound structural foundation or roof, those that have faulty electrical installation, insect infestations, water or mold damage, and more. These are the types of costs that can put you instantly in the red-for good.
What to address first
As far as tackling renovations goes, it can be overwhelming when you have to decide on what to start on first and the many factors that can influence this. For instance, it can come down to something as simple as your available budget, as well as addressing any safety concerns that require urgent attention to get the property as move-in ready as quickly as possible. When it comes to renovations, you can do it yourself. The more straightforward tasks are usually the best, like painting and general decor, if you don’t have specialized knowledge of more in-depth processes like electrical wiring or plumbing, for example.
Don’t neglect what’s outside the home. An attractive landscape can make a home much more appealing. Search online for tips for finding local tree trimming services and landscapers to give the natural features around the home some TLC. And read service reviews first; you want to source companies with a reputation for quality work. Once you have a list of good companies, reach out to them to get quotes for work.
Other potential business prospects
Apart from fixing and flipping a property, you could opt to hang onto it a little longer and turn it into a vacation rental instead. Just remember to register your new venture as you would any other business. For example, applying for an Employer Identification Number or EIN can help you obtain tax deductions down the line.
In summary, flipping a property you helped transform into something new is extremely rewarding. This is one of the reasons why many choose this career path. And they have never looked back since. So, if you're considering heading this route, it could be one of the best things you ever decide to do. Reach out to Larsen Insurance for custom insurance solutions to protect you and your investment during your house flipping journey.