Twin Cities - What You Should Know Before You Buy That Flippin’ House
October 27th, 2007 Categories: Real Estate News, That Flippin' House
The big Twin Cities area foreclosure auction has come and gone. Many homes were sold to would-be investors who want to flip their new purchase. Some of these investors had never been inside the house that they just purchased.
Finding just the right home to fix up and resell can take time. There are many things you must consider before you buy. There’s been a real surge of homes sales to people who got caught up in the Flip This House craze.
Here’s how to make sure your flip doesn’t flop.
The first thing you need to do is buy low. Seems like a fairly simple concept, but how low is low? I don’t believe it really matters where you buy, as long as you buy low enough. You put all of your hard work and money into refurbishing the property so you’ll make a profit when it goes back on the market. Having your Realtor do a comparable market analysis of the extreme nearby area helps.
Before
In Progress
Viola!
Have some vision
Does this house have the basics? Hardwood floors, natural woodwork, good floor plan come to mind. What about the location? Don’t hope to get lucky when you buy a house that backs up to a factory or unsightly apartment building. You want to sell fast and profitably so pick a good spot. When it’s completely refurbished, will the clients like it?
Knowing what it’s going to take to get the home up to par with the rest of the neighborhood is a bit tricky, but certainly not impossible. Get your contractors out to the house before you make an offer and have them estimate the costs of painting, refinishing floors, new roof, landscaping, rewiring and quite possibly replacing missing copper pipes.
Watch the house that you want to buy for a while. Particularly in this market and if the house is bank owned, you can really get some good deals if you wait it out a little. You’ll get a good idea if you’re going to profit on the home. Don’t be afraid to make a lowball offer. We Minnesotans have a tendency to play nice and we’re too polite. Just go for it!
If you’re looking in a city like Minneapolis that has a Truth In Housing ordinance, read that document closely! If the city says, for example, that it estimates that $15,000 has to be put into escrow for possible electrical repairs to unexposed wiring in the walls and you find out later that the cost will be $30,000, that’s quite a bite out of your budget! Remember, the city inspector comes back around to do another inspection once you list the house again for resale.
Pour over the Seller’s Disclosure statement! Just because the current homeowner discloses a problem, doesn’t mean that it was completely rectified. He may have put a proverbial bandaid on it. Bank owned properties won’t even have a seller’s disclosure and the home is sold “as is”. It’s their right to do so, however, it’s up to you to fix the problems before you put the home back on the market.
Once you’ve submitted an offer and the seller accepts it, get your own home inspection by a good, competent inspector who does it for a living. In Minnesota, you don’t have to have a license to inspect a home. Uncle Steve might be a great guy and handyman, but that doesn’t mean you should hire him as your inspector. If your inspector finds situations at the home that appear to have structural issues, for example, get a structural engineer out to the home. Same goes for mold, plumbing, etc. It may cost you a little, but it will definitely be worth it in the end.
There are some great bargains out there and refurbishing a home is a very rewarding experience. Have fun with it, but do it right!
Jeanie, nice rehab! I’m looking for a house to flip in Plymouth or Edina but am having trouble finding one that is affordable enough to justify the expenses to put a new kitchen in, etc. Do you have any suggestions?
Jim, buy low and sell high! There are plenty of bargains out there, even in Plymouth and Edina. To save money, it’s best not to have to install what you don’t have to. For instance, find a house that already has hardwood floors and have them refinished. Or, paint the cabinets instead of replacing them. Stay tuned, I will be providing contractor’s names to assist you flippers out there.
sounds like good advice. i look forward to the contractor info. thank you!
Jeannie-
Great site!
Keep up the good work.
John