What to Fix or Replace When Flipping a House

An experienced investor will review a property & identify items that need to be fixed or replaced by simply looking at it or the listing. This post will help with the estimation process and the initial decision to purchase and flip the house. When looking at the large list of things in a home that can be in disrepair it can be overwhelming and cost can quickly get out of hand.

What to fix or replace when flipping a house? The property exterior repairs would include:

Cracks in the driveway, stairs or walkway concrete
Loose railings and porch damage
Missing or damaged roof tiles
Damaged windows and framing
Clogged rain gutters
Exterior paint or stucco including the garage
Overall curb appeal including landscaping

The property interior repairs would include:

Water stains & damage in bathroom and basements
Fix cracks and paint all walls ceilings and floors
Toilets with a loose base or clogged sinks
Check that the HVAC operating properly and the date of last service
Check all plumbing fixtures, faucets, and date the water heater
Fire and CO2 alarms not working or present
Signs of pests such as termites or carpenter ants

The National Association of Realtors recently release their “Confidence Index“. The report shows that of the sales closing in May, 74% of them had a contract contingency. The most common contingency at about 54% were due to home inspection and 43% were due to getting an acceptable appraisal. The goal is to identify and fix the major issues and prepare the house for sale to a new buyer, not necessarily to fix every issue.

How To Identify House Exterior Repairs

Finding exterior repair’s and upgrades are a very important red flag that there may be more underlining issues that are not visible on the exterior of the property. Curb appeal is an important selling tool so visible damage or issues should be fixed. It’s also good to be reminded that the goal is to sell or flip the property for a profit so it does not need to be the nicest house on the block.

What House Exterior Repairs To Avoid

Let’s go over some items to avoid when looking at the exterior of the property. These are high cost items that can help steer the in-experienced investor from a financial mistake or just avoid a large pitfall.

Damage to the structure refers to the house structure as well as drive ways and walkways. Cracked pavement and driveways can be a turn-off to buyers but replacing an entire driveway can also max the budget. Unless you are experienced and can provide an accurate cost for repair this type of work should be avoided.

Pooling water near the foundation or spongy soil can be a sign of issues. Check gutters and down spouts to be sure they are directing water away from the structure or into the sewer.

Repairing and replacing the roof can be very costly. When there are roof leaks inside sometimes replacing a few tiles for a low cost is effective but a full roof replacement should be avoided.

Replacing siding can very expensive and may end up eating most of the budget. This is to say to avoid expensive repair like serious damage to the siding but simple repairs, cleaning or painting is an opportunity to improve the curb appeal.

Window replacement is another area where experts suggest avoiding. The window, shutters and surrounding area can be painted to help with the curb appeal but leave window replacement for more energy-efficiency to the buyer.

What Exterior Improvements Can We Make?

Now let’s review some opportunities to improve the exterior and the curb appeal of a house. The idea here is to improve the homes curb appeal as well as impress the buyer when they walk around the house and back yard. We are focusing on low cost and avoiding over-improvements.

Curb appeal can be improved by simple landscaping such as cutting the lawn, bushes and adding some potted plants or flowers to color up the front of the house. Flippers will recommend installing a new mailbox as this is something that is spotted when they first arrive.

Other opportunities include replacing or repainting the front door and garage doors. The doors should function properly without jamming or sticking. If there are screen doors they should be cleaned and also function properly.

Loose hand rails should be repaired or tightened down. This item can appear on a home inspection list as a safety issue so do not skip it.

For the exterior of the house and garage, rent a pressure-washer from the local Home Depot or Lowe’s and wash the siding around the house and garage. If the garage is painted then repainting it and the house trim can brighten the property up nicely.

Outdoor lighting is optional as this may not be visible when the buyer visits the house during the day. Lighting around walkways and steps may be required by a home inspection.

How To Identify Interior Repairs

The interior of the property is more complex and will involve contractors to estimate and perform some of the work. The focus is to look for issues that will fail an inspection or cause a home buyer to turn away. The average home buyer is looking for functioning HVAC, Heating and plumbing along with solid floors, walls and a dry basement.

What House Iinterior Repairs To Avoid

The most common red flag is water stains and this is what the home inspection will be looking for around throughout the house. Some professionals will use an infrared camera to spot water damage and find other issues. The source of the damage should be identified so as to avoid any heavy repair costs that cannot be seen easily. In rare cases it might be hoarder house and this type of damage ois not easily identified.

An example of this is an improperly installed bathroom, shower or bathtub. Even a small leak through the water barrier can cause major damage to the sub-floor and the cost would be full repair plus the cost of the bathroom remodel.

Basement water damage such as flooding or foundation leaks can cost thousands of dollars depending on the damage, amount & type of water and whether a sum pump needs to be installed.

What Interior Improvements Can We Make?

The interior offers opportunity to perform repairs for aesthetic reasons as well as performance. It’s well known that kitchens and bathrooms tend to sell homes as opposed to a finished basement or new deck in the back yard. Here are some repairs to consider when flipping a house.

Update the kitchen with new appliances and a cabinet refacing. If replacing appliances is too costly than there are inexpensive options such as stick on panels that can give the kitchen a cosmetic overhaul. Removing appliances or cabinetry can also give the kitchen a larger more spacey feel.

Update the bathroom or install a new one. Replace aging or damaged toilets and sinks where possible. Repair cracked tiles or install single panel shower walls to make the bathroom look clean an newer.

The average lifespan for HVAC is about 15-20 years, replacing the HVAC with one that is higher efficiency can be a plus to the home buyer.

The average life for a tank water heater (gas) is about 8-12 years and replacing it is low cost but can help with the sale. Electric water heaters seem to have a higher operating cost but about the same installation cost.

Buyers like hardwood floors so scratched surfaces can be sanded and refinished. If there is carpet on top of the hardwood floor, remove the carpet as the floor is more attractive to a buyer. Clear the room of most furniture to show it off.

If the walls are wallpaper it is recommended to remove the wallpaper and paint the wall instead. Damaged drywall should be replaced and repainted along with scratched or damaged trim.

A fireplace is a another amenity that home buyers prefer. Effort should be made to check that the fireplace is in good operating order and any cleaning done by a professional. This is another item that can increase the sell-ability of the home.

OTHER

To be successful in flipping houses there needs to be an understanding of the business aspect. The profit comes from the price paid for the property minus the repairs that are necessary. The focus should be on properties that need mostly cosmetic improvements until the flipper has more experience with pricing repairs and dealing with contractors. The truth is cookie cutter type homes will sell faster then unique design and decorated homes.