College 101: Fix It and Flip It
My buddy and I have a crazy plan: we pooled our resources, got our parents to co-sign a mortgage, and bought a house on the edge of our college. We want to fix it up and sell it by the end of this year at a profit. The house has good bones for the most part. There are no leaky pipes or holes in the ceiling, but stepping inside feels like you’re taking a time machine back a few decades, and I think the last person to live there was a smoker. What are some tips to flip a house? Do you think we can pull this off?
What a cool idea! Houses in college towns are often dilapidated (thanks to absentee landlords), but they attract investment buyers like flowers attract honey bees. We think that you can pull it off, and we have three tips to help you flip, all of which are eminently in your reach and will make that shaggy house way more desirable.
An easy way to coax a house into this century is to redo the kitchen. Old kitchen appliances are an instant giveaway of a house’s age. Furthermore, new appliances are more efficient, safer, and more desirable. It isn’t cheap, but a minor kitchen remodel includes new cabinets, new appliances, new countertops, and paints, and it adds 82.7 percent of the costs back to the total value of the house. This means you can borrow against the house to redo the kitchen and generate almost the entire value in return. Yes, this means you are taking a slight loss in the remodel, but it makes your home much more likely to sell. Because you are taking a loss, you don’t want to spend more than 6 to 10 percent of the home’s total value on the kitchen remodel. That way, you keep your losses to just a percentage point or two of the total profits, which you can make up for through aesthetic fixes.
What do we mean by “aesthetic fixes”? It sounds like your house has that terrible, decades-of-cigarettes smell, and likely a decades-of-cigarettes appearance, a foul yellow reminiscent of toxic waste. You can clean this off the walls, but there is more you can do to spruce up your time-warped house than just removing the bad stuff (though you definitely want to remove the bad stuff). By making positive interior design choices, you can bring it into this century. Modern wallpaper from brands like National Wallcovering have become very hip in the last few years, and can give your house the artful touch that buyers love. Carpets are also an easy (and cheap) replacement, as worn floors can signal to buyers that the house is shabby and in need of other repairs. Like people, the best houses out there are beautiful on the inside.
However, buyers can see past pretty wallpaper and fresh carpets. Any potential customer will be shopping with an eye towards the structural integrity of the house. This is where most house-flipping ambitions become stymied. Because the house’s foundations, walls, and electrical and plumbing systems are so important, a potential customer will often walk if they find any of them in bad shape. Repairing them can be incredibly expensive. You mentioned that the house has “good bones,” so it is a good sign that there are no visible problems with the house. However, you should definitely talk to a home inspector and contractors to do a more thorough walk-through. According to the specialists in home foundation repair at Acculevel, issues like sticking doors and windows, musty smells, and cracked foundation walls can be a sign of major problems. While these problems may seem minor, or even be invisible, ignoring them can cost you a sale, as well as thousands of dollars of eventual repair costs.
Just like in school, waiting to do an assignment until the last minute can result in a failing grade. If you instead choose to learn, study, and make wise decisions early on, flipping a house will be an easy “A.”Subscribe to The Daily Cardinal Newsletter