Articles / flipping a property
Flipping a house:
Why you should feel good about buying a dump.
/ By Mj Gladding 10.02.06
I know what you’re thinking. Is she crazy? Why would I want to buy a house where there is more work involved? Why would I want to knowingly take on a project that will cost more money? Well, before you pick up your ball and quit the game, consider the following benefits to gutting and flipping a property:
1. The biggest fear: “What if something comes up that I can’t see?” is a very common concern when getting ready to take on the project. When doing a "gutting the property," you assume everything that can go wrong. One of my favorite sayings is “when you gut them, they are all the same.”
2. Contractors may actually call you back for the job. Plumbers and electricians would much rather work in a shell of a home where there are no walls in the way and they get easy access to the areas that they need to work in. And get this…it speeds up their job time which lowers their price, which lowers your bill. Ask an electrician to rewire a house with the walls closed up, and they are likely to decline the job because they have no idea what they have signed up for. If for some ungodly reason they do take on the job, they will charge you a fortune. And just to kick you when you’re down, you won’t be able to tell if they did a good job because you won’t see their work.
3. You get a new house at the end. A great benefit of gutting everything is that everything in the house is new with the exception of the actual framed structure itself. This is very appealing to the buyer who would like to buy or build a new house, but simply cannot afford one. They are typically bigger then new homes for the same price as well.
4. Easy sellers. Because of the newness, these houses sell easily and for top dollar. People like to buy homes with new appliances, new carpet, and new paint. It is a fresh start to a new beginning. This will always be an attractive quality and an easy seller to the buyers.
5. Pick the ugly ones! Less competition to acquire the gut rehab because most real estate investors are pursuing cosmetic ones. People think that if something “looks” good then there is no work to be done.
6) Easy to estimate your costs. When dealing with newer homes that have modern electricity and plumbing, it is fairly easy to estimate your costs. You know that at worst you may have to do some plumbing and electrical repairs, but redoing these entire systems is very unlikely. However, when you are dealing with an old house, you may wonder if you need to repair or replace the plumbing and electrical. When doing a gut rehab, it’s a given, you are going to tear it all out and put in new. Because you are redoing everything, it gets very easy to estimate your rehabs. If you are doing similar type homes, you simply remember what the expenses were for the last home you did and apply that to the next one.
