Have you ever flipped a house? If your experiences are limited to watching mesmerizing before & afters on home renovation shows, that's great (I'm right there with you!). But if you are seriously considering going into purchasing property in order to turn it over for profit, read on.
Cherie Barber is a renovation expert and host of the HGTV show, Five Day Flip. She shares her wealth of house flipping knowledge in her new book, Renovating for Profit: Transform Your Property on a Budget.
It’s no fluke that some properties sell in an eye blink, while others languish on the market for weeks or months, unable to drum up that excited conga line of buyers. Nailing exactly what your target market wants is one of the keys to profitable flipping. The aim is to buy, renovate, and sell in the shortest possible time frame—and that’s a formula I’ve successfully mastered over 100-plus renovations, both in Australia and in the U.S.
So here are my five top priorities to consider if you want to buy the right kind of fixer-upper, bring your renovation home within budget, and turn your rough diamond into one of those hot properties that buyers desperately want.
1. Buy at the right price
This is absolutely critical. Once you overpay for your unrenovated gem, that’s instant profit down the drain; and if you’re working on a tight budget, it will be almost impossible to claw back. So do as much market research as you can before you buy. Once you’ve nailed down the type of property you want to buy, make sure your knowledge of property prices rivals that of the top real estate agents. That way, you can pounce when the right property comes up—and know exactly what you should pay for it.
2. Work on a budget
This may sound like a no-brainer, but so many people simply spend money willy-nilly as the renovation progresses, then find at the end they’ve hopelessly overspent. Your starting point needs to be a budget that’s proportionate to the current value of your property. For a cosmetic renovation, I cap the budget at 10% to ensure I don’t overcapitalize. That means if your property is worth $500,000, your budget is $50,000. Then the discipline is making sure all your materials and labor costs don’t go a cent over, or you’ll start eating into your profit.
3. Match your renovation to the target demographic
This is the key to pulling in a pool of excited buyers once you’ve renovated and are ready to sell. Spend time researching the type of renovated properties that are hot sellers in your target neighborhood. What are the key features that make them desirable? Once you know this, you can tailor your renovation to your buyers’ wish list and not fritter money on things they don’t want. And always match the caliber of your renovation to the value of your property and the standard of finishes your market demands. No laminate countertops if your buyers are expecting gleaming stone ones!
4. Don’t go overboard with the wow factor
While it’s good to have a bit of wow factor, you don’t want a renovated property that is going to polarize your buyers into those who love it and those who hate it. So when in doubt, keep it neutral: from your color palette through to your fixtures and fittings. Then maybe consider some glamorous accents, like feature lights or a wall in textured wallpaper.
5. Never underestimate the power of professional styling
It may seem like an indulgence you can ill afford at the end of a tightly budgeted reno—but trust me, you’ll always see that money back when your property sells. Professional styling can add real added value to the price your property fetches. It creates the magic for buyers and allows them to see the property at its absolute best. And it’s your best guarantee your renovated beauty won’t be languishing on the market for months.
Finally, here’s my hit list of things that work for virtually any cosmetic renovation. Your aim is to target the really visible improvements that you can knock over in a short time frame.
- Give the whole place a fresh coat of paint. It’s what I call “liquid gold.” It’s inexpensive, one of the few things I can recommend you can safely DIY, and it will absolutely transform a tired property.
- Revamp the flooring. If there’s tatty carpets with lovely old floorboards underneath, then ditch the carpets and polish up that beautiful old timber.
- Update the lighting. Replacing gloomy old light fittings with contemporary beauties can radically change the feel of a property. Choose a mix of practical ambient lighting, along with task lighting and feature lights.
- Renovate the kitchen and bathroom. Research confirms these are two of the most important rooms for buyers, so devote sufficient time and budget to doing them well, without overcapitalizing.
- Make those first impressions count. From the landscaping to the house color to the paving, make sure your house has top-notch curbside appeal. It doesn’t have to be an award-winner. But it definitely needs to lure those buyers across the threshold and leave a lasting good impression.
Have you flipped a house before? Share your experiences with us below.