Budgets can balloon quickly on fixer-uppers.
If you decide to invest in one, you need a high tolerance for risk -- and an
exit strategy. The consensus from most home remodeling experts is this:
1.
You can make more flipping a really cheap house that you turn
into a nice house than a nice house that you turn into a premium house. All
those expensive upgrades don't offer nearly as much return on your investment
as just fixing the basics, such as bathrooms and kitchen.
2.
The more people you get involved, the more coordination is
required. You'll have to keep very close tabs on plumbers, electricians and
handymen.... your best bet is to hire a general Home Improvements contractor (like our company - ISC Services, Inc. if you are in NJ), this will save you time and money in the long run.
3.
Think local. The closer to home you stick for materials, the more experts
you'll be able to find to help you install them.
4.
Don't overestimate your work. Sure, that paint job looks nice,
but is it really worth a $20,000 markup on the property? Overpricing your
property could just leave you with a house that people are wary of because it's
been on the market too long.
5.
Don't get ahead of yourself. First-time flippers may see dollar
signs when they think about buying multiple properties, but problems can
quickly turn into bankruptcy if you're using one house's equity
to pay for another's repairs. Plus, each home requires attention, and unless
you're quitting your day job -- which the experts also don't recommend for
newbies -- you will probably have plenty to do for one house without thinking
about your next flip.
6.
However long you think the renovation will take and whatever you
estimate it will cost, just understand that it will probably be much costlier
and more time-consuming.
7.
Nearly every upgrade you skimp on will haunt you, remodelers
warn. From cheap carpet to cheap electricians, quality of workmanship is something
that flippers cannot fake in a softening market.
Depending on your goals and the extent of the
renovations, fixer-uppers can take a few months (or less, if you're really
lucky) or years to turn around. If you want to live in your investment as you're
working on it, remember that there may be a lot of sawdust in your future. And
while up-and-coming neighborhoods can explode overnight, there will also be
fluctuations in crime rates, local business booms and school improvements, all
of which can affect your property's value. Patience is key when waiting for a
neighborhood to take off.
