Working on my first flip here. I had to make cuts to my repair budget because my Realtor says it's a buyers market and not to go too crazy on the rehab. Just fix it up nice enough to put on the market at a low price point where I can still make money vs going all out and having sit for 6 months and breaking even because most likely they won't pay my asking price.
This leaves a bunch of questions because I'm not sure what to do with some of these repairs. Let's start with the kitchen!
Kitchen: You can't really see it, but the appliances are older and beatup. I wanted to replace with all stainless, but because of my cuts I'm looking at either all white or all black... or is this one area I shouldn't skimp on? I'm going to paint neutral colors throughout the house. The cabinets are "ok" but do have some scrapes on the doors. Are these replaceable with the same type of cabinet door? Counters are Corian. Now for the Bathroom!
Bathroom looks decent, but it's handicap accessible... the room down the hall is as well. I'm thinking about walling it up on the one side and making it a one door. Has anyone run into this and done the same or left it alone? I'm worried it may be a negative for most buyers.
I'm fixing missing panels and holes in the wall, that part is easy for me. The carpet is pretty messed up. I'm faced with getting it cleaned or replaced. I don't know how clean these come out with a good carpet cleaning service. As you can see it's a good sized finished basement, but if I can save costs with getting it cleaned that would be best. What do you think?
Here they have a nice sized deck that needs a good wash and stain. Seeing as by the time I get this on the market it'll be mid September going into fall. With that in mind what landscaping should I do? I'm planning to cut the grass, fill in holes (dogs like digging), but I don't know if I should plant anything or put down new mulch. Does anyone put down new mulch in fall? I guess it couldn't hurt. Also, with fall/winter coming and that deck should I just power wash it, or go all the way with staining? I'm trying to tell myself I can get away with just a good deck wash and let the buyers deal with staining it, but it could also be a great selling point too.
This is a game or a process that as flippers we go through on every flip we do. But I can tell you not getting your house to PAR will most likely make your house sit on the market. And of course over building will eat up all your budget. So every flipper every house as to determine what that line is and flip accordingly.
There are a couple things that you have to look at to help you you determine what to do:
1. Have you seen any of the interior pics of your comps that you are using?
2. What is the ARV?
3. Have you been inside of and walked around other properties in your area that are on the market that are similar to your house?
I think first you have to determine what does the market expect, determine that first then we can determine what to put in the house.
Remember there are 3 things that sell a house:
Skimp on one of them and it could be detrimental to your flip.
That's my next step @Andrew Cordle is to see what my recently sold comps had and what sold quick and what didn't. It's something I knew I had to do, but wasn't like "Oh... that's my answer duh!" Lol.
ARV is $135,000 and is the avg selling price for the area. I was hoping for $140,000 but my realtor says to shoot for a selling price of $130,000 or lower so now I have to adjust my repairs to reflect that. As-Is the house would sell for $115,000 to $120,000 as other houses I've seen there were in similar shape sold for that much.
Something maybe a little off or I am missing something.
How is the ARV 130k to 135k and the AS IS value 115k to 120k?
Meaning what ever rehab money you put into the house you are at best only getting back, where is the forced equity?
I'm not sure what forced equity is, but if I understand your question right you're asking why do anything to it if I could just sell it as-is for $115k-$120k instead of putting 15k into it and selling it for the same difference?
It is a good question. I would have to look more closely at the houses in the same condition and the big question is how long did it take those ones to sell. My original thought was if I fix it up to look a little more updated = it would sell faster as it would appeal to more buyers vs. lower sale price and no repairs = longer days on market because it wouldn't appeal to many buyers in that condition... or would it? You bring up a good point and I need to look into this more.
I think the question is, what is the minimum you'd need to do to bring it up to the 135k range. Are we talking some paint, some finishing touches, and steller staging, or is it closer to the other end of the spectrum? No sense in doing the extra work to break even. But if there is money to be had in short order by investing 5-6k, go for it.
Between white and black appliances I'd generally go black. Mainly because even stainless appliances feature black parts, but never white, so to me it "feels" closer to stainless than white appliances.
Can the cabinets doors be repaired with a sand and repaint? The kitchen doesn't look terrible. The floor looks decent. It really needs fresh paint on everything, some new window dressings, and perhaps matching appliances (color-wise).
Bathroom doesn't look bad. I'd probably repaint and replace the standalone sink with a vanity of some kind to fill that gap between it and the toilet a bit.
I've never messed with basements before, as we don't have them really in the PNW. Not sure what is typical over there in terms of basement finish. What do the comp basements look like?
@Dylan Long and @Andrew Cordle I like your points here on this subject. With such a small spread between "as-is" and the "average price" I'd be very careful about what money is spent on repairs. With that said I think two words come to mind: "neighborhood norm." Specifically, what is the "neighborhood norm" for the $135K houses in the area. Then I would do whatever was needed to create that type of home character with the "LEAST" amount of money. Getting creative and imaginary would be a big part of it.
I'm liking this! Thanks for the advice guys. I could have sunk 15k into this and only got about 10k return, but because I'm going to do less repairs to get to that point I can realize closer to a 20k return. I'm still doing my research and will check out a few open houses, but I have a new perspective on this now.
I'm not saying this is the package to buy, but a stainless package can be had relatively inexpensively. It adds the stainless bling, without the hit to the budget
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