Retirement could be the perfect time to jump into a new industry. If you’ve ever considered flipping houses, retirement may provide the time and resources necessary to give it a try. Of course, to be successful, you need to plan your endeavor carefully. Studies show that if you play your cards right, you can make an average of 40% return on investment. Here are some tips and resources from Seattle Staged to Sell and Design to help you make it happen.
Look for Red Flags
Buying a house as-is can drastically reduce the purchasing price, but it means higher renovation costs. Before purchasing a fixer-upper, you need to ascertain how much repairs will cost. Major issues such as mold, asbestos, foundation problems, HVAC work, and electrical issues must be addressed but can run thousands of dollars. In fact, these repairs can add as much as 20% to your initial remodeling estimate.
Consider Forming a Business
Registering a fix-and-flip business legally separates you from your renovation efforts. This separation offers several benefits:
- Asset protection
- Tax advantages
- Personal liability protection
If you’re working alone, you may prefer a limited liability company. LLCs offer flexibility while establishing your business with the state. To add more public legitimacy to your company, consider using an online tool to make a logo and download it. This will provide your new company with an identifiable look when dealing with contractors.
Also, if you plan on hiring employees, you’re going to have to pay them. That means investing in a system that gets payroll services processed quickly while maintaining meticulous records, thus saving you a lot of headaches when the next tax season rolls around.
Make a List of Renovations
Once you’ve taken care of necessary repairs, you can focus on renovations that increase property value:
- Nice landscaping
- Upgraded bathroom
- Finished basement
The kitchen is another space that can benefit from upgrades. Installing a range hood is a great way to keep the kitchen feeling fresh and clean. If you decide to replace the sink or otherwise remodel the plumbing, make sure you hire a plumber. For your protection, look for fully insured and licensed companies; read reviews online to ensure there are no complaints. Typical costs range from $45 to $150 an hour, but it’s worth the expense to make sure there are no issues with the pipes.
Check Out the Neighborhood
When looking for the perfect fix and flip opportunity, location is paramount. Make sure you check out the following when considering neighborhoods:
- Property taxes
- School quality
- Proximity to shopping and entertainment
- Potential for development
Find the Right Contractor
If you have experience in the construction industry, you may be able to handle small projects on your own. However, if you plan on major remodeling, you should hire a contractor. Of course, there’s always the risk of getting scammed, so it’s essential to vet contractors carefully:
- Verify they’re licensed
- Determine how experienced they are
- Ask for and check with references
Pay in Cash
Purchasing a house with cash gives you an edge when negotiating and speeds up the closing. While you can use a mortgage to cover the costs, most fix and flip investors use faster funding options:
- Self-Directed IRA
- Crowdfunding
- Hard money loans
- Business line of credit
Hire a Real Estate Agent
Real estate agents have networks of property professionals at their disposal, making them an invaluable resource when house hunting. To find a qualified agent, look for the following:
- Years of experience
- Familiarity with the local market
- Good communication skills
Sell the Upgraded House
Once you’ve finished remodeling, it’s time to sell. Most fix and flip investors aim to sell within two years, which means you’ll have to market hard:
- Professionally stage the residence
- Post virtual tours online
- Highlight upgrades in the listing
Successfully flipping houses is a lot of work, but it can be incredibly profitable. With a keen eye for property and well-planned renovations, you can make a business out of upgrading fixer-uppers.
As a boutique-style design studio, Seattle Staged to Sell and Design makes every client feel like our only client. Call (206) 334-0266 for a consultation today.
Guest Article written by Suzie Wilson
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