How to Fix & Flip Houses
Buying a fixer-upper house that can be turned around quickly can make a nice profit for an investor. The objective is to buy cheap, make inexpensive repairs and sell the house for a profit. It is important that you pay attention to small details such as curb appeal and make renovations that will appeal to the majority of potential buyers.
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Instructions
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Figure out the after-repair value of the home you are thinking of purchasing. Ask an appraiser to look at the house, or look at other houses in the neighborhood to see what homes in the area have recently sold for.
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Determine what your buying costs will be. Include closing costs, loan costs, homeowner's insurance, property tax, sales commission and document fees. Get estimates by asking for a mortgage quote, and ask for all fees to be included. Go to your local tax office to find the tax on the property. If you are using a real estate agent, find out what his commission is. Budget for unexpected costs that may occur. Include an additional $2,000 in approximate costs for additional repairs or unexpected fees.
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Subtract the basic costs of acquiring the house which you arrived at in Step 2 from the approximate sale amount. This will give you the amount you have for repairs and profit. Subtract the amount you want to make as profit to determine how much money you can spend on repairs.
Have an appraiser look at the home if major repairs are needed. Kitchen, bathroom and roof repairs can be expensive, and an appraiser can give you the true value of the home in its current state. This way you can budget for major repairs and deduct these from the projected sale of the home as well.
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Repair the most obvious problems first. Look at inexpensive landscaping options that can make the outside of the house more attractive. Think of plants, shrubs and flowers that would improve the way the front yard looks. Go to your local nursery and ask for help. Buy the plants that are the cheapest to add beauty to the house.
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Make improvements that will appeal to the most people. Avoid using floral wallpaper, bright colors or designs that appeal only to specific people. Apply a fresh coat of paint in a neutral color.
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Make small changes like replacing outlets, light fixtures and curtains. These will make the home seem brighter, and the cost is minimal. There are many of these small things you can do to the home to make it more valuable.
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Advertise the home locally and online when the home repairs are finished and you are ready to sell. Place ads in local newspapers, hold weekend open house events to allow potential buyers to walk in and look at the home. Advertise on classified online advertising sites like Craigslist, USFreeAds or FSBO. Links to these sites are available in the Resources section below.
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References
Resources
- Photo Credit small house, big house image by Nino Pavisic from Fotolia.com
