When you’re flipping a house, profit is the final goal and main focus. You want to make it worth the time and money that you pour into the property on the front end. Increasing your profit level when you flip a house is all about understanding your priorities and knowing where you can take shortcuts.
Know What You’re Getting Into
A house can turn into a money pit, so it’s important to know what you’re getting into. If possible, inspect the home before making an offer. Look at the main systems like plumbing, electrical and the structure to ensure everything is sound. If you’re bidding on a foreclosure blind, you can still learn about the house. Get a copy of the approved floor plan from the local building commissioner, and try to look at recent sales in the area to determine what the sales market is like. You know that you will have to make repairs to the home, but before making an offer it’s important to know how extensive those repairs will be and how much they might cost you.
Set the Repair Priorities
Gutting the house and replacing everything is costly, and it can eat into your profit margin. The goal is to make sure the home is structurally sound and visually pleasing. This means that your top priority is making sure the electrical system is working and there are no plumbing problems. An inspection of the home electrical wiring by powerhouseutah.com will give you an idea of whether the wiring needs repairs. Broken items and holes in the walls must be repaired or replaced. However, dated items don’t necessarily have to be gutted. It’s important to make the repairs that make the home livable, rather than the repairs that make it visually appealing first.
Looks do Matter
Having urged you to focus on the more important features, like safety and stability, it’s important to note that looks do matter. That doesn’t mean that you have to replace the siding and go with high-end carpet in the living room. Paint the existing siding for a fresh look. Use contractor-grade carpeting throughout the home. Install new hardware on cabinets and re-finish them to update the look without the cost, and make sure that every room has a fresh coat of paint. Finally, have a cleaning crew make sure that the windows are sparkling and the entire house is clean from top to bottom. A cleaner, more modern look is what is most important.
Minimize the Taxes
Something people don’t consider when flipping a home is the taxes that will be owed on the short-term investment. However, you can minimize this liability. Keep track of all your receipts throughout the process. Every can of paint, tool, hour of hired labor and other materials should be tracked meticulously and written off on the taxes. This reduces the claimed profit on your taxes and increases your profit margin in the long run.
If you’re considering flipping a house, take steps to maximize your profit levels. It starts with making smart buying choices and knowing what you’re getting into, but it carries through to how you file the taxes on your venture. With the right steps and priorities, you can make more money doing what you love.