Flipping Houses For Dummies. Roberts Ralph R.

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on the less-important stuff.

      

Schedule the work so that it proceeds logically. If you install new tile and carpeting before painting the walls and ceiling, you risk ruining the new tile and carpeting. A good rule of thumb is to work on the infrastructure first – the foundation, electricity, plumbing, heating, and air conditioning. Then, work from the top down, finishing with the floors. Likewise, depending on the location, you may need to schedule curb-appeal renovations in the spring, summer, or fall.

       Applying makeup

      The ideal house for a first-time flipper is one that requires only cosmetic work – what I call makeup. Cosmetic work, covered in Chapter 15, includes the following low-cost repairs and renovations:

      ❯❯ A fresh coat of paint throughout the house

      ❯❯ New siding, fresh paint, gutter replacements, and other external tweaks

      ❯❯ New wall-to-wall carpeting in any rooms that need it

      ❯❯ New light fixtures

      ❯❯ New outlet and light-switch covers

      ❯❯ A thorough cleaning inside and out

      ❯❯ Window washing

      ❯❯ Storm window and door repair or replacement

      ❯❯ Lawn mowing, weeding, and trimming trees and shrubs

      

Cosmetic repairs don’t add as much real value to a house as, say, a new kitchen may add, but they attract buyers. Often a house is undervalued simply because it’s unkempt.

       Tidying up the exterior

      Curb appeal is everything when you’re trying to sell a house. If prospective buyers pull up in front of a house that looks disheveled, they’re likely to pull away before you have time to open the front door. To sell your house for top dollar, it has to make a good first impression. It must have curb appeal – a fresh, well-manicured appearance that draws people into the home.

      Chapter 16 shows you how to landscape and prepare the exterior of the house to make it draw passersby inside for a closer look.

       Focusing on kitchens and bathrooms

      Depending on their condition, kitchens and bathrooms sell houses or sink deals. A spacious kitchen with plenty of counter space and all the essential amenities – a clean range, refrigerator, microwave oven, and dishwasher – creates an impression that the kitchen is a great place to prepare meals and hang out with friends and family members. A sparkling-clean, well-lit bathroom with plenty of storage space creates a sense of comfort and cleanliness that permeates the house.

      

Although you should never over-improve a property, renovations that bring the kitchen and bath up to market standards always pay for themselves by adding real value to the property and making it more attractive to buyers. See Chapter 17 for the full scoop on renovating kitchens and bathrooms.

       Making moderate changes

      Somewhere between painting a room and building a room addition are moderate changes that you can make to a house to improve its value and draw more buyers. These improvements include installing replacement windows, replacing the screen doors or entry doors, and refinishing wood floors or installing tile or vinyl flooring. Chapter 18 lays out your options.

      

According to the National Association of Realtors’ 2013 Cost versus Value Report, you get the most bang for your buck on renovations by replacing the front door.

       Tackling structural enhancements

      Some houses are begging for a few major overhauls. Maybe the house has an unfinished attic that’s perfect for an additional bedroom or a beautifully landscaped backyard that has no easy access and no deck or patio. In some cases, you may discover a dinky house surrounded by mansions. By raising the roof and building a second story, you can double the living space and boost the house into a higher bracket. Chapter 19 takes on some of these major renovations, which may inspire your own creative visions.

Profiting from Your Venture

      Although this book focuses on the buy-fix-sell approach to flipping houses, you can profit from a flip in numerous ways, including the following:

      ❯❯ Sell the property.

      ❯❯ Sell to an investor who’s better equipped and more motivated to flip the property (you’re essentially earning a finder’s fee, also known as the bird-dog fee).

      ❯❯ Refinance to cash out the equity in the property, usually to help finance repairs and renovations or to use the money for other investment properties.

      ❯❯ Sell the property on a lease option, essentially collecting rent with the hope that your tenants will eventually purchase the property.

      ❯❯ Lease the property – become a landlord!

      ❯❯ Sell the property on a contract, acting as a bank and collecting the interest.

      See Chapter 20 for details on the various approaches to profit from a flip. In Chapters 21 and 22, I explain how to market and sell your home for top dollar. And in Chapter 23, I explain certain tax considerations that may help you keep more of your profit by paying less of it to your rich Uncle Sam.

      

Your options for profiting from a house flip basically fall into two categories depending on your goals: cash or cash flow. In other words, do you want to receive your money all at once by selling the property? Or do you want to keep the property and use it to generate a steady cash flow (by leasing the property or selling it on contract, for example)?

Chapter 2

      Do You Have What It Takes to Flip?

      IN THIS CHAPTER

      ❯❯ Squeezing a house flip into your already hectic schedule

      ❯❯ Taking inventory of your financial readiness

      ❯❯ Checking your gut for the daring and determination to succeed

      ❯❯ Putting together the tools you need

      Anyone can do it.

      If I had a nickel for every time I heard someone say that about flipping houses, I could retire on my own private island in the Pacific. When a real estate investment guru says, “Anyone can do it,” what she really means is, “Anyone like me can do it.”

      I

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