Are you considering renovating your home for the first time? Or have you renovated your home in the past and made horrible mistakes? You'll want to know what other home renovators are doing and what they're not doing.
Whether you’re looking to flip a house in Ventura, California, or Las Vegas, Nevada, this Redfin article offers valuable tips to save you time and money. From choosing the perfect location to selecting a reliable contractor to marketing your property, we’ve got you covered.
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1. Consider the location
Choosing a location is one of the most important factors when flipping a house. First, you need to make sure you have a short commute if you plan to be an active participant in the renovation process. However, to assemble the right team (contractors, painters, designers, etc.), you need to make sure that everyone who will be working on your home is easily accessible and won’t be a problem with distance.
Now, from the perspective of selling property, location is just as important. Flipping a house in an area where there is active demand for your property can make or break the deal. If you plan to keep the property as a rental, consider both short-term and long-term demand. Would it be best to locate close to a city center so visitors can quickly get hold of your popular item? Or is the home a tranquil retreat tucked away in nature, away from the hustle and bustle?
Rui Wang is vice president of marketing at Ark7, an online platform for real estate fractional investment. She recommends locating your rental property close to a city center, which will increase occupancy rates and make it easily accessible for travelers.
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2. Budget accordingly
When it comes to flipping a home, numbers are important. Spend too much and you'll suffer financial losses. Spend too little and you'll struggle to secure a tenant or buyer.
Real estate finance experts BiggerPockets explain the importance of calculating After Repair Value (ARV). How much will your property be worth after repairs? To determine a property's ARV, you need to know its current value, the value of renovations, and perform a Comparative Market Analysis (CMA). A useful rule of thumb to help you in this process is the 70% rule: you should never pay more than 70% of the ARV minus the cost of necessary repairs.
Konstantin Podyachev, CEO of Expo Home Buyers, recommends setting aside 10 to 15 percent for unexpected expenses that may come up during the course of your renovation, and you don't want to find yourself in a financial bind. In the best-case scenario, everything goes according to plan and you'll have 10 to 15 percent left over.
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3. Talk to a real estate agent
Before purchasing a home to renovate, we recommend consulting with a real estate agent. An agent will have extensive knowledge of the area you want to buy in and can guide you through the entire process. It's important to understand the challenges you will face from learning about recently sold or rented homes that are comparable to your vision.
Additionally, assembling a team of contractors, designers, appraisers, and inspectors can be a challenge. Having a real estate agent as a guiding resource to contact these individuals can be a step in the right direction.
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4. Don't assume your plans will go awry
When you start renovating your home, make sure you have the perfect plan in place, but don't expect it to stay that way. If your plan involves knocking down walls and ripping out subfloors to change the layout, you never know what you'll find.
You may find more than meets the eye at first: termites, asbestos, mold, and other nasty things that can throw a wrench in your plans. Before you buy a property, do your due diligence and have an inspector check the home. The inspector should look at everything from sewer and water pipes to the soundness of the foundation and structure.
Bobbie Wasserman, founder and CEO of Single Lady Estates, recommends calling in a professional if any concerns arise: “An expert's insight can provide a comprehensive understanding of the current state of your home's critical (and expensive to repair) systems.”
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5. Don't slack off, but don't overdo it
The cheapest contractor's bid is always tempting, but be sure to ask to see someone's portfolio of work (and even tour their current projects) before you decide. Another helpful tip is to read reviews and reach out to people they've worked with before to hear first-hand how well they executed your vision.
Will Rugeley, marketing manager at Good Vibes Homebuyers, says that in 2020, his team bought a home for $15,000 and sold it for $143,000, yet lost $8,500. This happened because they chose the contractor who submitted the lowest bid before they had even been vetted. Based on initial estimates, Will and his team were way over budget as ongoing expenses accrued. He now advises to “be wary of abnormally high or low renovation estimates.”
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6. Consider the design
Once you've scouted the location, it's time for the fun part: designing your home. The first thing to decide is whether you'll design it yourself or hire a professional interior designer.
Designing a home as a short-term rental (such as Airbnb or VRBO) is very different from designing a home for long-term rental or sale. For short-term rentals, Wang suggests making each room a “functional oasis that offers guests both basic amenities and maximum comfort.” This is reflected in Ark7's Seattle D1 property, where the blue facade and tall trees seamlessly complement the warm, archetypal interior.
When designing for a long-term rental or sale property, the adage “less is more” can come in handy. Think of potential buyers or renters touring your amazing property. You'll want them to envision living in it. That life might mean leaving space for an accent wall or taking inspiration from what you've already designed and asking a higher price for additional features.
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7. Don’t forget about marketing
After putting all your heart and soul into designing the perfect property, the last thing you can’t forget is marketing it. Your real estate agent will be your greatest asset in showcasing your home to potential buyers and renters.
The experts at Old Pueblo Stucco have some tips for creating a curb appealing exterior that will make people say “wow” at first glance: Hire a photographer or videographer to capture the best angles of everything that makes your home unique, plus, be sure you (or your agent) write compelling copy that highlights all of its best features front and center in your property description.
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Some final thoughts on the dos and don'ts of flipping a house:
Flipping a house can seem like a daunting task. Remembering some key points will guide you from start to finish. Learn from people along the way, consult with experts, and also keep exploring the available online resources when you need clarification.
Beyond the challenges and twists and turns of “do this” or “don't do that” lies the amazing experience of what your work of art will become.