I’m super excited to share with you guys a project we’re in the middle of in New Jersey. This is an ENORMOUS house—it’s going to be a luxury home. We’re about three-quarters of the way done with the fix and flip.
I’m going to walk you through this property, while explaining three essential tips to bear in mind when flipping a higher-end property. I’ll also go over all the numbers involved in this deal.
You need to watch the video above if you have any desire to get involved in fixing and flipping luxury properties. We bought this one for $235,000—and it was a third of the size it is now. We’ve added a level—and lots of square footage—and I can’t wait for you to see this video tour.
But first, here are the things you HAVE to consider when taking on a project like this.
3 Tips for Successfully Flipping Luxury Homes
- Go higher on your finishes. With this type of property, you can’t go builder’s-grade, standard grade, el cheapo, anything. It has to be perceived as something that’s really nice. They have to look like finishes that fit in a luxury home. For instance, the front door we installed on this home is not a standard door. You’re not going to see it on a shelf at a big box home remodeling store. This one probably cost $700 to $800. If you’re wondering why we’d spend that much on a door, think about it! It’s the first thing you see when approaching the property. Light fixtures, sinks, appliances, floors, buyers looking at luxury properties are going to be considering all of these things. So, your choices need to be a bump up from what you might pick for standard properties.
- Create a “sizzle” factor. For these types of properties, there needs to be something that when you walk in the door, you go, “Wow! I wasn’t expecting that!” In other words, make it sizzle. And have a few of those throughout the home. In this instance, an open, double-high ceiling throughout the entire foyer of the house is one of those wow factors. This house also has two master bedrooms (one on the first floor) and an enormous master bedroom (on the back). These should knock people’s socks off and make the property unique.
- Add bonus spaces. This house has areas that could be used as a playroom, reading nook, or sitting room. Plus, it has a finished basement. Any other little square footage nooks and crannies are important to people who are considering luxury properties. You want them to feel the prosperity, to think, “This house has so much extra room! What are we going to do with all this space?!”
- 3,500 square feet
- 5 bedrooms/4.5 bathrooms
- 2 master bedrooms
- 1/2 bath on first floor, several upstairs
- Finished basement
- Projected Sale Price: $795,000
- Purchase Price: $235,000
- Construction Costs: $250,000
- Sales Commission: $39,000
- Selling Expenses: $15,000 (aka 2%)
- Carrying Costs: $75,000
- Projected Profit: $179,000
A profit of $179,000 for one year’s work?! It’s pretty amazing.
Before taking on a property like this though, make sure there are other homes in the area that are selling for similar prices. You want your final product to have been remodeled to be on par with the other homes in the neighborhood.
One other thing, I did this whole deal using other people’s money. You can do the same thing!
Watch the video above for more details about this luxury fix and flip and to find out how to raise capital to fund such a project. A great place to start is by reading my book Raising Private Capital, which is available on the BiggerPockets Bookstore. Get a 20% discount code to purchase it at the tail end of the video.
Do you have questions about this project? Or questions about how I funded it?
Ask me in a comment below.