risk ruining the new tile, carpeting, or flooring. 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, starting with the roof and finishing with the floors. Likewise, depending on the location, you may need to schedule curb appeal renovations in the spring, summer, or fall — such as new landscaping or siding or a new roof.
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, including base trim
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
Making a good first impression
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 drive off 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 have the ability to 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 an inviting 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.
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.
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 these strategies:
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 (rent-to-own), 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.
Chapter 2
Devising an Effective Flipping Strategy
IN THIS CHAPTER
