Identify (and Avoid) these Fix and Flip Red Flags

Hard money investors sometimes only focus on the ARV rate, but may not pay attention to some property features which could elevate rehab costs. Lucky investors can snap these features, but not always.

Read the following fix and flip red flags which could cost you extra money in your investments

 Avoid kitchens with an uneconomical layout

Quoting recent stats, almost 5 to 15 percent of the flipping home ‘s total value is usually spent to rehab the kitchen. Out-of-date appliances and old-fashioned cabinets can be replaced, even if they may cost you a big fortune. In the end, your profits will far surpass your rehabbing fees. However, the situation is quite different if the original layout of your property is unacceptable. For example, kitchens lacking of storage spaces or with an inconvenient setting layout of electrical appliances, may turn off today’s buyers. And the renovation cost can drive you crazy and even out of the acceptable range. 

An in-ground swimming pool won’t always add to your profits

In fact, unless your property is located in a neighborhood where all the surrounding houses have pools, an in-ground swimming pool could drive potential buyers away. What’s even worse is that the pool needs to be removed or repaired since it is in poor condition. You are expected to spend $6500 on average to remove it.

Pay attention to black mold

Black mold can lurk in your house when you are not noticing it, in the corners, or even behind the walls, leading to a string of issues, i.e. illness and respiratory problems. Especially check those dark spots and fuzzy stains. If you detect any signs of leaks or sense musty smells, you need to be more cautious because these are signs of mold. Before you sell the house to the buyer, you are responsible to clear all the molds. This work could cost your time and energy to the rehab project.

You may think that a single problem could be OK and will not cause a buyer who is interested in your property to walk away from a perfect deal. However, since nowadays people are more emphasizing living quality, all the typical problems in an older home could diminish your profits and lower the expectations from your investors. But fortunately, all the problems can all be resolved if you spot them before making the deal. That’s why we highly recommend that you check all the issues mentioned above to earn you the most profits. 

Benjamin Donel, CEO