Fixing and flipping a home is no small task. While it can be an exhilarating and rewarding way to turn a profit, it certainly requires some hard work and the willingness to take on a little bit of risk.
With that in mind, if you’re in the home stretch of a fix and flip, here are three important things to consider before you try to sell.
1. Is the house up to the standards of your ideal buyer?
During the renovation or rebuild process, it’s important to take into consideration what standards potential buyers will have when it comes to the quality of the home. For example, if you’re working in a family-oriented neighborhood, you should consider what parents (or future parents) will look for in a house. Kitchen counters should have rounded edges, and the floors should be slip resistant. Alternatively, if you’re expecting some tech-savvy buyers, consider how a few small steps can go a long way towards building a modern smart home.
Whatever the case, take a look at comparable properties in the neighborhood to make sure your house is up to buyer expectations.
2. Is the house inspection-ready?
Before you can put your fix and flip up for sale, remember that many buyers will make the purchase of a home conditional on the property passing some kind of inspection. To prepare for this process, you can hire an inspector yourself, or even build a checklist of items that an inspector would look for during an inspection. These issues could be big or small - making sure outdoor structures like decks are level and secure, checking that any trees on the property are healthy and a safe distance from the house, and confirming that all plumbing and electrical systems are up to code and functioning as expected.
Another thing to consider is how much certain issues may cost to repair. For example, a crack in the foundation might be expensive, disruptive, and time-consuming to fix. Plus, whatever you spend on repairs won’t necessarily increase your selling price by the same amount. Instead, think about having a contractor assess the issue and estimate the cost to repair it, and lower the sale price accordingly.
3. Consider your investment goals & strategy.
When it comes to fix and flips, it’s important to define your goals and strategy up front. If you’re an experienced flipper, you might be investing in multiple properties at the same time, with the goal of flipping a high volume of houses in a shorter time period. In that case, you should aim to get your home on the market as quickly as possible to maximize your annual profit.
Alternatively, if you’re planning to rehab to rent, you should be aware of how much it actually costs to maintain the property on an ongoing basis. Keep an eye on factors like upkeep, taxes, and costs of financing, and make sure any rental incomes actually offset these costs in a sustainable way. If your profit isn’t enough to justify holding onto the property, it’s time to consider a sale.
The Bottom Line
For all the work you’ve put into your fix and flip, it’s important to make sure you clear any final hurdles before putting it on the market.
And if you’re looking to maximize your profit on your next investment, be sure to have a look at our ebook, Essential Math for the Fix and Flipper to get started.