Retirees often discover there’s not enough to do to keep them busy once they’ve left the workforce. Often, many begin thinking about returning to work in a limited capacity, but in a way that fits their goals and lifestyle. If this sounds like you, house flipping could be an excellent choice, especially if you’re interested in home renovation or come from a construction background. Not only will this type of endeavor help you fill your time with productive activity, but it can also line your bank account.
Getting Started
Some things to look for when buying your first flip include a quiet street, a good neighborhood where houses are maintained, a decent lot, and a great floor plan. Some ways to find homes to flip include attending auctions, seeking out foreclosures, bank-owned properties, or HUD homes, and developing relationships with local real estate agents. Financing options for flip houses include hard money and conventional loans, private lenders, and crowdfunding.
When purchasing a fixer-upper, sometimes the cheapest option isn’t the best due to the cost of hidden repairs. When completing major projects such as electrical work, foundation repairs, HVAC upgrades, or removing mold or asbestos, add 20% to your estimate to cover unexpected costs. Also, check with your local building inspector’s office to determine what permits you’ll need before beginning work.
Business Setup
Since this is a business, you’ll want to select an entity type and register with the state. Choosing an LLC as your business setup can provide you with a safety net to protect your personal property if your company is involved in a lawsuit. LLC owners can also take advantage of tax savings, such as what’s offered through the Tax Cuts and Jobs Act, which may allow a deduction of up to 20% of any net business income earned. In addition, forming an LLC is affordable, and it’s easy to do through an online service.
Interior Renovations
To make your flip more enticing to buyers, you’ll want to complete renovations that increase its value. Consider these value-enhancing ideas:
Kitchen and Bath Upgrades
Homeowners spend a lot of time in their kitchens and bathrooms. Since both areas may require repairing or replacing pipes, hiring a competent plumbing contractor is important. To find a reliable contractor, read online reviews before getting an estimate, and choose someone who’s licensed and insured. You can expect to pay between $45 to $150 per hour for plumbing services, depending on your location and the scope of your project.
Value-boosting kitchen and bath upgrades include adding a backsplash, upgrading appliances, and updating light fixtures and faucets. Other recommended interior upgrades include adding storage space, remodeling the basement or attic, touching up the paint, and installing smart home items.
Exterior Upgrades
Nice landscaping and a well-kept exterior encourage prospective buyers to schedule a viewing. Some upgrades to consider include:
- Updating entry and garage doors, or windows
- Repairing or replacing the siding, shutters, and roof
- Installing or maintaining landscaping
- Touching up paint or repainting
- Installing new lights
- Adding a deck
If the backyard doesn’t have a fence, it’s in your best interest to have one installed. This will be another way to boost the value of your property, and you can widen the net when it comes to buyers, particularly those with pets. Just like with plumbing or electrical, a fence build is often best completed by a professional. These experts can quickly erect a fence in just a few days. Obviously, cost will vary depending on the type of material and size of the fence. The average cost to build a fence runs approximately $4,500, but again, it could be higher or lower.
Whether it’s interior or exterior professionals you need, always find top-rated pros with a history of reliability and quality workmanship. Sometimes word of mouth is a great way to find someone; however, it’s wise to check out online directories where you can read reviews and testimonials from previous customers. A quick search for “plumbing or fence builders near you” can point you in the right direction.
Recommendations for Success
To be successful at house flipping, beware of common pitfalls. These include a lack of funding, time, skills, and patience. Plus, it’s essential to find an ideal property at the right price, with suitable financing, and reliable contractors. And always keep in mind what home buyers are looking for when you plan renovations.
To sell your home, you can use DIY marketing through word of mouth, signs, and online ads, or you may choose to hire a real estate agent. Having a great location, and renovating your property to appeal to buyers, can help it sell quickly.
House flipping can be a great way to make some extra money in your retirement, and it can also help you stay busy and engaged with something you’re passionate about. We hope these tips help!
Are you looking for help managing your finances or growing your wealth? Feel free to contact me at anytime to discuss this and various other investment ideas by calling (910) 363-4548
Author & Registered Principal, John Starke
John Starke has spent more than 22 years in the financial services industry. Prior to becoming a registered principal, he spent decades in the commercial real estate development and construction industry, giving him tremendous insight into alternative real estate investing, 1031 exchanges, and various trust strategies to mitigate taxation. He focuses on education, and hosts many free events to help consumers understand financial issues, often inviting other experts to speak.
