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House Flipping Tips - How to Flip Houses to Make Money

By Edited Jun 13, 2016 2 8

How to Flip Houses

If you are you thinking about buying a house, solely with the intention of reselling it in the future, and want to know how to flip houses, read on.   We have done it and this is what we learned.  We bought a house that had 35 dogs in it, spent 18 months fixing it up and achieved our goal.

How to Flip Property - Selling a House Quickly

How to Make a Profit Flipping Properties

Being able to successfully flip any property hinges on being able to buy it at the right price, spend the minimum amount of money and time on it to make it presentable, with a quick house sale at a profit.   Having unexpected delays and expenses will eat into your profit, and may even end up costing you money so always estimate things conservatively.

Experienced home owner or not, paying for home inspection is an excellent way to be sure of what you’re buying, and give yourself an idea of quotes you need and get an idea of overall renovation cost.  It’s not the costs that will sink a project, it’s the unexpected costs.

Have your realtor come up with a list of comparables, or a reasonable expected selling price for the house once it is fixed it up.  Some people sell the house by owner preferring to save the commission, but a good realtor may be more help than you think, and give you a better idea of house resale expectations.

Calculate Costs Before Buying a House and Flipping It

You need to have a good idea of purchase price and related costs, the cost in time (mortgage payments, taxes and utilities) and money to do any renovations, and the reasonable selling price for the area and the associated selling house costs.  Without these three things you will have less chance of making a profit flipping houses.  Finding out the assessed value of the property is very important for obtaining bank lending.  If the house is priced way lower than the assessed value you have much better chance of making a profit. 

You should decide what type of flipping you want to do.  Do you want multiple houses overlapping where you hire people to do the work and have a proper house flipping business, or just make a little on your home and when you upgrade in a couple of years?   If you are living in the house while it is renovated, and it is your principal residence, capital gains taxes are generally not an issue, but you’ll need to carefully check with a tax advisor before taking the plunge.

What Skills you Should have if you Want to Rehab Houses

  1. You need vision – to look at a run-down property and see its potential.  Look past the broken windows, peeling groovy wallpaper and avocado toilets, to see an attractive house with spa like bathrooms.  The uglier the inside of the house, the more money you can make.

  2. You should have some DIY skills or want to learn them quickly.  Having a whole house to fix up in a short period of time will be much easier if you have done some of this type of renovation work before.  The more work you can do yourself, the less it will cost you to fix.

  3. You should be a hard worker. There will be a point where you can’t go back and you have to carry on, despite how much work it is, so you need to be determined to succeed.

  4. You should be able to prioritize.  What renovations or work is necessary, what might be good if you have time and what is just a luxury for the property.   

  5. Know your limits.  Sometimes a property is just not worth the cheap price.  Renovating a rundown house is a huge family commitment.  If you have extensive commitments already or financially you have to do everything yourself, with no prior knowledge, it will be easy to become overwhelmed.

When looking for houses to flip make sure that

Bathroom in Need of Redecorating
Most of the work that needs to be done is just cosmetic.  Cosmetic work you can do yourself will yield the best bang for the buck.  Paint is relatively inexpensive and replacing shutters, wallpapering, laying flesh flooring and landscaping is still not unbearably expensive and yields great rewards.  Replacing old bathroom fixtures and fitting also yields well. 

The house doesn’t need new roof, rewiring, leaking basement, new furnaces or ductwork or other “hidden” repairs.  The fixing up that will bring the best return are the easily visible things that house buyers see directly improving their quality of life.  You could buy a house that needs the above, factoring the repairs into the price.  Chances are, if it needs basic mechanical work, it hasn’t been looked after and there will be many more repairs you’ll need to do.

  • The house you want to buy and flip is at least three bedrooms and ideally two bathrooms, or one bathroom with an obvious option for putting in a second.  And all things being equal, houses sell faster if they have a garage.

  • Filthy, smelly, cluttered pack-rat type houses can be very inexpensive, but make sure you can have a good look around and that the junk isn’t hiding huge holes in the walls or signs of roof leaks and other expensive repairs.

  • When considering a house that has smells like it had a lot of pets, plan on replacing all floor coverings, baseboards, and possibly subfloor and drywall.   Check for sponginess and rot in the subfloor. 

  • If the kitchen is very poor and cupboards can’t just be repainted or countertops simply replaced, make sure that the house is suitably priced to pay a professional to install a new kitchen.  New kitchens and bathrooms sell a house fast.

  • You are likely to get a better house for the money if the sellers must sell for financial reasons.  Maybe if it is an estate sale, someone has a long distance job transfer or the household is splitting up. 

Unexpected things to expect when flipping houses

Plan on everything taking way longer than is reasonable and costing more than you thinkIf pulling up flooring, removing walls, and emptying garages and sheds, always be prepared to open a can of worms and find more work that needs to be done, the home inspectors may not see really hidden problems.  Expect to find revolting bio-hazardous items.  Make sure you have suitable coveralls, gloves, masks and goggles for cleaning.

Removing junk is expensive.  If you plan on renting a dumpster and filling it yourself to get rid of debris, bear in mind each dumpster will cost about $500 to empty.  Don’t forget to factor that into your costs.  Sometimes you can get scrap metal dumpsters loaned to you and picked up for free, but don’t count on any income from it.

Expect to ask yourself or your partner “What have we gotten ourselves into?”  It will be OK, just focus on the big picture, no matter how discouraging the project may seem.

10 Tips to Fix up a House and Sell a Property Quickly

  1. Redecorating and Painting is the Cheapest Way to Fix up a House to Sell Fast
    Clean and paint everything – a good shellac primer is great if there a lot of odour or stains on the walls.  Light neutral colours are great and make the house look larger.  Paint unfinished basements if you can, white walls and the grey or red garage floor paint.  It will seal out odours and make the basement brighter and neater.
  2. Pull out all any old stained carpet and torn linoleum.  If you can find inexpensive replacements such as laminate flooring, or replacement linoleum go ahead and replace them, it is fairly easy.  In older houses with tongue in groove wooden sub floors, it is possible to rent an industrial sander and refinish the floor inexpensively and it looks great when it is done.

  3. Keep everything neutral colours and make bathrooms and kitchen spa-like and fresh looking.  Replace any toilets, baths or sinks that are not white.  Look for them on kijiji, and Craigslist and place wanted ads if needed.  Often people have brand new items they have never installed and want rid of, you’ll save the taxes too.

  4. Replace dated fixtures and door handles.   Don’t pay a lot for fixtures and fittings and materials - look in the bargain areas and habitat for humanity type stores, or buy reasonable ones on sale at the hardware store.   By all means, buy quality; just try not to pay too much for it.  For example, when putting in a new bathroom, we were able to buy marble tiles on sale and that bathroom sold the house, within a week of listing.

  5. Make sure all windows are cleaned and presentableIf the windows are old and wooden, give them a fresh coat of paint, you probably won’t recover the cost of replacing windows even if you try and do it inexpensively unless the house is in an awesome neighbourhood and is otherwise perfect.

  6. Show and sell the house with furniture in it, but not too much.  Store extra furniture and personal items such as photographs in a storage locker or with family.  Put other odds and ends under the bed in storage bins.  Items smaller than your fist should be packed away and having tidy house plants is a nice touch.  Your house should look like a nice spacious hotel room when you walk in.

  7. Staging a house will sell it very quickly.  Add a little luxury with the right accessories and take them with you when you sell. 

  8. Make sure the house is well lit and light and airy feeling.  If any large shrubs are blocking light through the windows it is worth trimming them back or removing them when you tidy the gardens, which you will need to do.  

  9. In the garden, pull out any old ugly shrubs, and mulch any flower beds.  By pulling out the old scratchy stinking cedars that were full of dog hair, we brightened the entryway, made it look bigger and placed some nice lush hostas in mulch.  Replace any cracked paving slabs and just neaten things up as needed.  Make sure any junk is gone.  Neat, tidy flowering planters add to the appeal of a home and can be moved with you.

  10. Make sure the house smells clean or of nothing at all, and that it is spotlessly clean with no clutter.

Get Started Flipping Houses

Make Money Flipping Houses
You should have a better idea of how to flip a house and what is involved. Take your time and do the math, and figure out the risks and what you are likely to earn from your property investment and whether it is worth your time.  Start off small and if you want to make a business out of flipping houses and real estate, expand later. 

If you plan on staying on your house for a few years, these house flipping tips can easily be applied to any home to increase resale value and help you sell your house quickly when you are ready.

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Comments

Nov 2, 2011 8:17pm
mosilager
That's my downfall, I don't have any DIY skills!. :)
Nov 2, 2011 8:22pm
skeffling
Well if you can find a property at the right price and a contractor or handyman at also the right price it might still work! You'd soon learn if you got started, if a DIY-able really good friend could help you get going, and you can learn so much on you-tube too!
Nov 3, 2011 3:47pm
LLWoodard
Great tips from someone who has experience with flipping houses.
Nov 3, 2011 6:18pm
skeffling
Thanks LLWoodard, it's ton of work if you do the work yourself! But worth it!
Dec 6, 2011 11:07pm
AuroraWindsor
This is a very detailed article. I liked your extensive list of ips and things to consider. Congrats on being featured. This article deserves it.
Dec 7, 2011 6:35am
skeffling
Thanks AuroraWindsor! How kind of you to say so, we certainly have had our fair share of experience with this. I glad you stopped by and enjoyed the article.
Dec 8, 2011 12:53pm
Lynsuz
Very nicely done and an awesome feature. You certainly sound experienced at how to flip houses.
Dec 8, 2011 3:15pm
skeffling
Thanks Lynsuz! You certainly learn quickly and wondering what you have got yourself into is a given! ;-)
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