Seniors who want to house flip may be a little overwhelmed after watching all the DIY television shows on home renovations and house flipping. Maybe you’ve thought about getting into house flipping yourself after you retire. House flipping can be very fruitful and rewarding. It’s the chance to see the potential in something, sprinkle that something with a little TLC, and turn it into the perfect space for a new homeowner.
Before you start flipping houses, you should know what you’re getting yourself into. First of all, you’ll need an abundance of patience, a positive outlook and a lot of energy.
We’ve prepared a few tips to help you get started on your first flip. And for more articles like this to help you make the most of your retirement, subscribe to Senior Influential!
Be Financially Prepared
To flip a house successfully, you’re going to need money — and lots of it. You’ll need to buy the house you want to flip and then you’ll have to pay for the renovations and improvements, including the contractor and the materials. All of which can cost lots and lots of money.
On average, the cost of flipping a house equates to the cost of the house plus 10 percent of its purchase price. You can take out a mortgage loan if you don’t have enough to buy the house outright. If possible, skip the loan and pay cash in full. That way, you won’t incur additional expenses such as loan interest, private mortgage insurance and other fees.
You’ll also want to prepare a budget for the project using a financial tool. QuickBooks Online Advanced is accounting software that flexes with you as your project moves along. Popular with many businesses, the software allows you to automate certain workflows and get real-time insights into the project’s financial health.
Identify the Right House to Flip
Not every house will be worth flipping. The key to success is knowing how to spot the ones that can be flipped and the ones that can’t. You also have to understand how the housing market works in your neighborhood. Certain indicators will let you know if a house is worth the time and money you’ll be investing, including:
- The location. Ideally, you want to choose a house that’s located in an up-and-coming neighborhood. Bonus points if it’s close to schools, shopping centers and public transportation.
- The condition. The house shouldn’t be a money pit. Stay away from anything with structural damage, a weak foundation, bad plumbing, etc. You want something that can easily be spruced up with some fresh paint, a knocked-down wall and maybe some new landscaping.
The more work a house needs or the longer it takes to sell, the longer you’ll be stuck footing the bill.
Find the Right Contractor and Subcontractors
Obviously, you won’t be able to handle all the renovation work yourself. You’ll need to hire a general contractor with a good reputation and a solid network of subcontractors. Subcontractors include painters, drywallers, plumbers and other trades people.
Be sure to do your due diligence when selecting the general contractor. For example, check the company’s online reviews and its rating by the Better Business Bureau. Also check the status of the company’s state licensing and insurance policies before signing a contract.
Once your first project is completed, evaluate your construction team. If you’re confident that you have the right team, nurture those relationships so you can hire them for your next house flip.
Flipping houses isn’t for everyone. Seniors who want to house flip need to know what they’re getting into first. Once you start, you’ll have to see it through.
On the other hand, house flipping can be a lot of fun and definitely more interesting than simply retiring without anything to do. It’ll allow you to generate a second income so you can travel and pursue the things you love. It can also provide you with immense satisfaction when someone buys the beautiful home you created.
Our thanks to Jim McKinley at MoneyWithJim.org for contributing this article.