It’s a great time to flip houses in many of the markets across the country. Inventories are lean and prices are going up fast. Flipping a house fast means having what buyers are looking for. Having what buyers are looking for means having a sparkling remodeled house at market price. Getting to market price means accurately estimating the cost of the rehab.
The best flipping business model means making an all cash offer without any contingencies – let’s go to the closing table tomorrow! You don’t need a house inspection because you do your own inspection. An inspection from roofline to basement foundation.
On the Roof
Start at the roofline and progressively work your way down. Does the house need a new roof? Look at it from every angle. Roofs are expensed in 100 square feet sections. Learn the cost per 100 square feet in your market and practice visually sectioning roofs out in 10 ft by 10 ft sections. Don’t forget to look for multiple layers of roof. It costs money to take off three layers of old roof – most codes allow up to three layers. Costs vary greatly depending if the roofing material is composite, cedar, tile, or another material. Match the prevalent material in the neighborhood.
Use the same method to estimate the cost of new siding. Price it out in 100 square foot sections by eyeballing 10 ft sections and knowing what 100 square feet of new siding costs in your market. Again, know your materials – vinyl, T-111, cedar, etc. Include the cost to paint new siding. While outside, look at the windows. Do you need to replace single pane windows with thermal pane? Need a new back or front porch?
What beginners often miss outside:
- Broken gutters
- Driveway needs repair
- Regional items like old air conditioners or swimming pools
- Everything on a detached garage
Estimating the Interior
Think modern. There’s a reason you bought the house cheap. It’s old. Plan to gut it and put everything in new. Floors, kitchen counters and cabinets, new appliances. Besides new floors throughout, and tearing off outdated wallpaper for a fresh coat of paint, focus on the kitchen, bathrooms, and master suite. Quality tile in the bathrooms and granite counters in the kitchen.
Now, take a good look at the mechanical systems. Are you going to be replacing the furnace, the electrical box, ceiling fixtures, hot water tank, or interior doors? You took notice of the outside door before you came in, right?
The secret of the 30-minute house inspection is having a thorough checklist. Don’t forget to inspect the basement. Besides structural issues, the most important part of the basement is consistency. Know if most of the basements in the neighborhood are finished or unfinished. Updating and matching the rest of the neighborhood will have your rehab sold in a week while the old house a street over doesn’t sell in six months.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years.