House flippers are back. In the mid-2000s, house flipping became nearly a national craze, with reality TV shows popping up everywhere telling us all how to make a quick buck. Then the real estate crash hit and the reality set in that house-flipping, like any investment strategy, can be a money maker, or a money trap. A recent report on ABC’s Nightline followed two house-flippers in Charlotte, North Carolina, Kim Williams and Maria Powell. House flips in North Carolina have increased by 14 percent over the last year, with the average profit $50,000. The two offered some advice on some things to avoid doing in order to make and not lose money.
Do Not Go Over Budget: Williams and Powell both say how important it is to stay within your budget and purchase “at the right price.” Look at every house as nothing more than an investment, and do not get attached to any particular house. Powell adds “It’s not emotional.”
Do Not Ignore Upgrades: Powell notes that some properties can be fixed up with not much more than a fresh coat of paint and some new carpet. However, if a home is in a neighborhood that will support a higher home price and more costly repairs are needed, like new plumbing or a new kitchen, the expensive repairs should be considered. She said “I think sometimes people don’t see the things they could do to bring the money back. If you do the minimum, there are some properties you should do that [for], but if the neighborhood will carry a higher price point, then you want the best use of the property.”
Do Not Skip the Inspection Before You Buy: There are some problems with a house, such as a crack in the foundation, that could be minor, inexpensive repairs, or much more costly ones. The best way to know for sure is to get the house inspected. Powell noted “It’s important to get it inspected because it could be a minor issue, or it could be a major issue. It could be a few hundred dollars. It could be a few thousand dollars.”
Additionally, the pair recommend researching the neighborhood, only paying contractors once the work is complete, making sure to get the proper permits, and considering renting if a sale does not look like it will make the required return.