When embarking upon a new home flipping venture, it’s essential to understand the specifics of the house early on. Which areas of the home do you need to enhance to make it a great flipping property? What is the timeline of the project? And, most importantly, how much will financing these renovations cost? Realistically estimating your home flipping costs is imperative when successfully flipping your home. These costs can range quite a lot, and the particular housing market plays a large role in this.
Determining the After Repair Value
Before you set your repair budget, you should do your best to approximate an after repair value. This number, also called the ARV, dictates the potential value that the house will hold after the renovation process.
The simplest way to approximate the ARV for your home flipping project is by examining the selling prices of comparable homes in the area. Looking at the prices of homes that have recently sold (and not those currently on the market) will give you a strong indication of the house’s value. If you cannot find any homes that have recently sold, then this may indicate a lack of demand.
For a more precise measure of the cost of the home, you can factor in the square footage. To do this, take the median sale price of a home in the area. Then, divide that number by the square footage of the house. This will show you the cost per each square foot. Next, multiply this number by the square footage of the home you are flipping.
Finally, be sure to take into account any additional bedrooms, bathrooms, home features, and scenic views.
Determining Repair Costs
The cost of home repairs has a lot of moving variables involved. Obviously, the initial state of the home and the standard for home features in the area both play a large part. But, having an in-house construction team committed to maximizing your profits will also lower these costs.
Take into account the cost that any potential repairs that your renovations team might need to perform. This includes:
- Kitchen renovations
- Plumbing replacements
- Foundation repair
- Electrical work
- Any other necessary projects
Keeping all of these projects on a manageable timeline will ensure that they remain profitable. Having a team united under your house flipping company will help them to understand the scope of work.
In order for a home flipping project to be successful, even the best real estate experts need funding. For experienced home flippers, this money generally comes from private lenders.
With a carefully selected property and the right renovations, these financing costs will be entirely worth the investment.
Calculating Home Flipping Carrying Costs
Renovation projects may be the most obvious home flipping costs, but financing the project can also take a financial toll. Each month that your home flipping company maintains ownership of the home, you incur additional fees.
For example, you will be required to pay home insurance. These monthly fees are entirely avoidable, especially by flipping your home quickly. Homes that are located in planned development neighborhoods also have additional fees associated with them. Other bills, such as water, gas and electricity, add up over time.
Selling the Home: Realtor Fees
After renovations are complete, the final step in the home flipping process is selling the home. To accomplish this, you will need an experienced realtor with a knowledge of the area. Our home flipping company regularly partners with realtors who understand the nuances of selling in the Long Island area.
Home Flipping on Long Island
At Atlantic Shores Home Buyers, we tackle every home flipping project with a high ROI in mind. By taking into account all of these unique factors, we maximize our profits for each home flipping project. Contact us to learn about upcoming projects, and how you can earn a high return with ease.