First Home Remodeling/Flipping

3 Replies

Currently in the middle of remodeling my home. I have until August to reach the 2 year capital gain exemption. However, I believe a sale in its current condition could see a profit of $40K. I have mostly finished "street appeal" remodeling, and still have a complete bathroom and kitchen remodel ahead (pending this advice). 

Completed Projects:

  1. 1. Sanded Floors
  2. 2. Painted Interior
  3. 3. Framed/stained decking over corroded slab
  4. 4. Built Back deck over small 3x3' slab
  5. 5. Painted Exterior

My initial plan has been to completely finish the bathroom and kitchen. With the crazy market, houses in the neighborhood (within the last 5-6months) have been selling at very favorable prices - and not entirely updated. Would there be a benefit to listing the property at a more favorable selling price before the 2-year mark, in hopes I could sell during the seller's market, and possibly make similar profits (w/out putting money/time into the bathroom/kitchen remodel). My thought is even while it is listed, I could continue to work on the property. Would love some insight. These profits will go towards a multi-family for my first "house hack." Also, I am a real estate agent in the area.

@Cameron Davis , I would recommend talking to a couple agents that focus on your neighborhood and ask.  A full kitchen and bath remodel will be pricey, but also have the biggest impact, generally speaking.  

You basically want three data points: current list price in current state, anticipated list price with remodeled kitchen and bath, and cost to remodel kitchen and bath.

If currently you could make $40k. Let's say it will cost you $20k to remodel kitchen and bath. ARV with remodel give you a sale price of $30k higher than current condition, I would likely do it. You are making $10k over your cost. Then again, if you could sell for $23k more than current condition, I would likely pass. $3k is not worth the effort in my book, and depending on scope of rehab you could open up some issues that cost a lot more than $3k.


Originally posted by @Evan Polaski :

Then again, if you could sell for $23k more than current condition, I would likely pass.  $3k is not worth the effort in my book, and depending on scope of rehab you could open up some issues that cost a lot more than $3k.


This. Also you want to keep track of your time. If April/May is the best season to sell a home where you are at, and you are almost done with your work, I'd say forego the expensive upgrades and aim to get it to market asap. 

Before I say anything, just note that I haven't fully been a part of the number planning that goes into fix and flips. I personally would think that you should 1) learn how the taxes would affect your profits 2) find and compare both potential profit numbers (sell now vs. sell after 2yr cap gain exemption) then 3) pick which one suits you! I'd love to hear which one you go with because I'm learning too. Hope this helps.