Investor · Castleton, VT · Member since 2015 · 32 posts · 9 votes
I'm not sure I get it...it seems that there are very few things we can do that actually add value to a fix up project. It seems painting gets the highest rate of return for the cost involved. So why are all these flipping sites and books having us upgrade bathrooms and kitchens and all sorts of stuff if we won't even recoup the costs of these projects? I've looked at many sites that show you what improvements provide the greatest return and there just aren't many improvements that bring in value. Cleaning up the place seems to be the best.
So is the only reason people do all these fixups is because they can't sell the places 'as is' ? What am I missing here . I know this may sound like a stupid question to most but I just don't understand.
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
8y
Bruce M. It is confusing to look at the Zillow website and it says a new kitchen costs 30k and increases your home value 26k. However, most flipped homes aren't in ok shape and therefore not sold at "market value." All the flips I've done the houses are bought for cash because they are so bad you can't get financing. So you get a house in a 150k neighborhood for 40k cash and then you have plenty of room to redo the kitchen and baths plus put on a new roof. Then sell to a nice first time homebuyer for 150k that doesn't have the cash to buy it as is or the know how.
That's worked for me anyway. I don't see how you could make any money buying an already decent house and hiring people out of the yellow pages to upgrade everything.
One final thing. People do lose money flipping. I personally know several people you have (one lost 100k and he's even a real estate agent) definitely not guaranteed. It's not like the TV shows.
Good luck!
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
8y
Bruce M. It is confusing to look at the Zillow website and it says a new kitchen costs 30k and increases your home value 26k. However, most flipped homes aren't in ok shape and therefore not sold at "market value." All the flips I've done the houses are bought for cash because they are so bad you can't get financing. So you get a house in a 150k neighborhood for 40k cash and then you have plenty of room to redo the kitchen and baths plus put on a new roof. Then sell to a nice first time homebuyer for 150k that doesn't have the cash to buy it as is or the know how.
That's worked for me anyway. I don't see how you could make any money buying an already decent house and hiring people out of the yellow pages to upgrade everything.
One final thing. People do lose money flipping. I personally know several people you have (one lost 100k and he's even a real estate agent) definitely not guaranteed. It's not like the TV shows.
Good luck!
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
8y
@Bruce M., simple: Flippers do not sell to Investors - they sell to Owner-Occupiers!
By and large, Owner-Occupiers are not Investors; they like getting emotionally attached!
@Josh C. has it well sussed. Because the homes he looks for are those that do need new kitchens and bathrooms (etc), he finds Sellers who'll let them go for a lotless (off ARV) than the cost (to him) of doing those jobs! You should too!
[ie. Don't bother with Sellers who won't!] Cheers...
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
@Bruce M. those websites showing you what a project costs and what it will return usually don't refer to investors, more or less a homeowner with a dated but decent kitchen/bath that they want to redo. The baths I have redone for my father in law cost a LOT more than the baths I redo on my flips. Sometimes 10-15 times more. His old baths were usable, just ugly. What he spent to redo them didn't make the house worth that much more, but he didn't do it to make money. On my flips the Kitchens and baths are usually trashed and the houses bought cheap. Being budget conscious when renovating and they "add" more value than they cost.
Investor · Castleton, VT · Member since 2015 · 32 posts · 9 votes
8y
Thanks for all the replies....I think my mistake in the logic and looking at all those sites is just how you kind folks have pointed out..... being that I won't be a typical homeowner looking to redo a kitchen or bath....so using those remodeling guidelines would be a mistake ......I appreciate the help
Blue Springs, MO · Member since 2017 · 24 posts · 16 votes
8y
Another way to look at renovations is it may not totally cash out what you put into it but if it makes the house sell much faster than the one next to it not updated it is money well spent. Less days on market equals less interest paid on the loan equals more money in your pocket.
Massapequa, NY · Member since 2017 · 90 posts · 42 votes
8y
@Bruce M. putting a little time, money into a place will make it easier to sell as well as give you the ability to possibly raise the worth of your home. Especially if you are able to do some work yourself some little things can bring huge value just by sprucing it up a bit. Quicker you can make it desirable to the market, less time you have whatever money you have invested is tied up and less interest paid.