Flip Checklist Budget – What You Need to Include on Your Budget for House Flipping

Many people are enticed into house flipping by television images of people ripping materials out of a dilapidated house, refurbishing it, and selling it for a substantial profit. The profit realized from each flip can be modest or substantial – or the investor could lose everything depending on decisions made before or during the process.

My house flipping budget checklist

Before you go shopping for the perfect rehab-to-flip property, you need to create a budget for the entire project, not just the purchase and rehab expenses.

The first item on your check list does not have direct monetary value and cannot be added into the expenses column. However, it is an important “ingredient” to your budget: an excellent credit score. Unless you are funding a flip entirely with cash or through private means, an excellent credit score works in your favor with the banks – especially when the loan is for a high-risk project like a house flip.

Now, let’s look at the specifics of your budget:

• The After Repair Value (ARV): determining the ARV of your potential flip is the starting point on which you can base your expected return on investment (ROI) when the house is put on the market. A trusted realtor can help you estimate the ARV of the property.

• Rehab costs: these will vary widely depending on how much rehab work needs to be done. A budget repair form can be handy for tracking all the repairs needed.

• Financing/carrying costs: these include not only the loan but also the costs of carrying the house until it is sold:

o Financing loan(s)

o Property taxes

o Utilities (gas, water, electric)

o Property insurance

o HOA/Condo fees

An important point to note here is that the longer the rehab work takes and/or the longer the post-rehab house stays on the market, the greater your carrying costs and the lesser profit you may realize.

• Realtor’s fees: you can sell your flipped house yourself (FSOB – For Sale by Owner) but if you are looking for the fastest turnaround on your investment – and profit – relying on a good real estate agent is worth the commission fee (and actually helps you save money on your flip project in the long run).

• Forgotten costs: these are additional expenses of house flipping that are often overlooked, including:

o Inspection fees

o Interest on loans

o Contingencies

o Closing costs

One experienced house flipper’s average budget was broken into these cost percentages:

• 53.25% = Purchase Price

• 20% = Labor

• 6.5% = Materials

• 8% = Carrying costs, utilities, commissions, etc.

• 12.25% = Profit

Realistic budgeting = reduced risk

There is nothing that can completely eliminate the risks inherent in house flipping but creating a realistic budget is one of the key ways to mitigate some of that risk. Another way to “manage” some of the risk is to become as thoroughly knowledgeable about house flipping before you make your first investment. And a final way to manage risk is to follow the old adage and never invest more than you can afford to lose.

Best wishes for your house flipping success!

How To Stage A Home On A Budget

Proper staging of your home is one of the first steps to selling a house, and it can be the most profitable. You may not see it at the time especially if you have to spend thousands of dollars to accomplish it that this is true. If you have properly staged your house it will always sell better. The good news is that most of the time it does not cost you thousands to bring the house to that point. If you continue to read this article you will find some low-cost solutions for you to get the ball rolling.

Why You Stage A Home

When you are staging a home it basically means that you are showing the home in its best condition. You want to show people that your home is a great home that is ready for their lives. All of the different principles of showing the house is trying to show it as useful and attractive. You want to give each room a true purpose, even if the buyer is not going to use the room the same way, you are showing that the house is functional. If you keep this thought in your mind you will judge the right staging and updates ideas are worth doing and which are not.

Make a Timeline

If you lack the money to do something sometimes you can get it done it just means that you will have to put in extra legwork. Even if your house is in great condition if you don’t make yourself a plan it can overwhelm you. You should start by looking through the contemporary magazines to try to find out what style you want to emulate so you know the overall style before you go looking for all of the things that you are going to buy for the home. You should also get a home inspection done so you know what items need to be fixed to pass the inspection. You should not try to be bold but instead you should pick one contemporary style that you are good with and stick to it throughout the house.

Low Cost Exterior Changes:

-Paint the front door, mailbox, and the numbers on the curb for an inviting look.

-Plant fresh, in season, plants around the house.

-Wash the exterior windows, fixtures, and outside of the home since they accumulate dirt over the years.

-Get a new doormat

-Hang a hammock to your backyard.

Low Cost General Interior Changes:

-Clean everything. Pay special attention to the bathroom and kitchen because this is where buyers are going to be on the lookout for mold, mildew, and other dust and dirt. Pretend you are cleaning for someone of the royal family.

-Fix and repaint the walls. Light colors like beige or eggshell. Paint the ceiling to be lighter color then the walls. Preparing your home in this way you will have to do a lot of tedious work but it will be far more expensive to hire a painter.

-Get rid of clutter and any furniture that will detract from the look of the room, and the house in general. After you have gotten rid of certain things then it is time to go shopping at places like the flea market, thrift stores, and garage sales to find pieces that accent the look of your home. Doing it this way can keep some of the cost down but at the same time give you a good design that you will be able to market properly. The items can be something as simple as a set of towels in a basket. Or maybe you add a lamp to a small room so you can give it the look of an office.

Home Staging on a Budget

Staging is an essential, and cost-effective, part of the home selling process. Staging your home to show off its qualities can only add to your final selling price. On average, people receive $2 in increased sale price for every $1 they put into staging a home.

When staging your home for sale, there are five golden rules to take into consideration as you work your way through each room of your house.

Five Golden Rules:

De-Personalised

The buyer needs to picture themselves in the house – not you. That wedding photo may mean the world to you, but the buyer it’s a distraction that prevents them from seeing a home for their family.

Maximise

Declutter and maximise the space in your home. Closets packed tight with all your clothes make a place like it lacks closet space. Consider temporarily storing the overflow offsite.

Sanitize

This golden rule is the easiest and cheapest way to stage your home – clean it. A sink full of dirty dishes is as unappealing to you as it would be to the buyer. It is well worth the elbow grease in cleaning floors, walls, baseboards, ceiling fans and windows.

Modernise

Unless your home has exceptional period built-ins, all home could benefit from some updating. If someone feels the house is dated, they will reflect that feeling in a lower offer. Consider a few simple changes like swapping out expensive fixtures for nickel or chrome.

Neutralise

Colour can make or break a buyer’s interest in your home. You may love that shocking red wall, but all the potential buyer sees is a great deal of painting in their future because of red clashes with their style. The picture is one of the most inexpensive ways to change a look of a home.

Bonus Tips

Closets

Clear closets of unnecessary clutter, and organise to maximise the amount of open storage space you are showing off to potential buyers. Use boxes stacked together to keep up and hide the clutter.

Use matching hangers for clothes – hooks are inexpensive so splurging on higher quality are inexpensive, so celebrating on higher quality hangers to replace free wire hangers from the dry cleaners will modernise your closets with visual impact and a more luxurious feel.

Bedrooms

A quick and inexpensive way to improve the appeal of your bedroom is to use gender-neutral colours when touching up paint jobs and re-accessorizing to have the broadest possible appeal. Colour coordinate where possible bedspreads, walls, curtains etc. should have a clear theme to their colours if possible.

Bathrooms

If walls are grimy, spray them using a standard spray bottle filled with a mixture of one part bleach and one part water, follow up with a fresh coat of paint.

Clear countertops of everything but the essential to make space look more open and more extensive.

Kitchen

Modernize your dated cabinets; they can be touched up for less than $200 with a coat of new wood stain and or even a good sanding a coat of paint. Replacing brass or wooden cabinet hardware with brushed silver or stainless steel is an effective way of updating dated cabinets as well.