By Candis Meredith
When it comes to a decision between flipping houses or renovate real estate to the extent that the renovation in question is more properly called a restoration, there are several points to consider. We have always been fond of Victorians, for example, yet I know how much work and expense restoration involves and how many unwelcome structural surprises might be uncovered. However, unlooked for construction problems can also be part of the effort to fix up and flip houses.
Factoids for Flippers
Profits are best, of course, during times when home sales prices are up. But location also figures in. Flipping houses is a more popular activity in Baltimore, Virginia Beach and other mid-Atlantic locations than it is in Houston or Denver. It therefore behooves someone interested in becoming a flipper to do some market research in the city under consideration.
Weighing the Challenges of Flipping
There are four key considerations:
• Locating a good house at a price low enough to make the deal worthwhile
• Finding contractors who will provide quality work at reasonable fees
• Accessibility to proper financing
• The ability to sell the house at a price that will cover expenses and provide sufficient profit
We recommend that potential flippers work out all the costs that will be involved in the venture, not just the improvement expenses. For instance, there will be the cost of borrowed money to begin with, and the costs associated with the actual sale. Additionally, during the time flippers own the house, they will have to pay insurance, utilities and property taxes.
Going for Restoration
While it is entirely possible that older homes that have been restored could be flipped and a good profit realized, it seems more likely to me that, considering the painstaking work involved, the owner will want to keep such a home. Restoration will likely bring many challenges, but the results can be spectacular. It might involve a 200-year-old saltbox or a 1950s ranch, but bringing an older home back to its best years is often an effort entered into with equal parts of determination, energy and love.
A Good Restoration Requires a Good Plan
The best advice I’ve ever heard, once the decision to restore a home has been made, is to develop a thorough plan for the job. This is especially important if the homeowner is going to live in the house while the work is going on. For example, provisions for cooking would have to be made while the kitchen is undergoing renovation, and one bathroom has to be available while others are being updated.
There are many more considerations, of course, and each restoration has its own set of problems to be faced. The best idea is to make a detailed road map on paper first. A good plan will make a great deal of difference in how smoothly and efficiently the actual work will be handled.