While many of us in real estate roll our eyes at HGTV it still seems to inspire some investors (especially new ones), there is gold in those old homes. It is a sellers market and we’ve found you can sell just about anything with 4 walls, somewhat stable foundation, and a mostly intact roof. Add the late night infomercials of rich guys sitting around a pool peddling their guaranteed ‘Home Flipping’ plan, and we often get calls from these ‘Renovation Investors’. There’s a little more to this ‘gravy train’ than what they tell you.
First thing to consider, are you a full-fledged contractor that has your fair share of remodeling experience? If not, you’ll have to factor in labor costs to the major part of the renovation. And unless you have a reliable contractor, be ready for major headaches on this part alone.
Second, how much cash you have lying around? It can be difficult to finance the purchase a home in need of a lot of work. Lenders don’t like to take a chance on a home with major needs so the majority of the cost will be in the form of cash or some other secured credit line.
Third, are you ready for surprises? Any contractor will tell you it doesn’t take much to derail a project when demolition uncovers hidden problems. If you work on a tight budget to flip your home, you might want to have a plan B.
Finally, do you have a seasoned real estate agent to work with who knows a bit about home renovations? Buying a home to flip can be profitable or not depending on the location. A good agent can tell you the best markets to invest in knowing the activity and the best eventual post renovation sale price. Your agent can also keep you from ‘over renovation’ as in adding costly features to the home that don’t fit with the area.
So, if you think you can handle the first 3 items you’re good to go because The Derrick Team is here to help you with your ‘Flipping’ real estate needs. Feel free to call or text 317-563-1110 or visit www.DerrickTeam.com for more information. And if you want to make your own HGTV show, well we’ll see what we can do about that too.