We’ve talked about the benefits and the pitfalls of a fix and flip (in a nutshell: you could make a load of money or you could end up in the psych ward) when you are, in fact, the fixer and the flipper. But what if you are just on the buying end of the deal? What if you are the lucky potential owner of a house that has been polished and prettied up for you?
Well, first, pat yourself on the back for finding a diamond without the rough. You just saved yourself a lot of work. And maybe your sanity. And who can put a price on sanity?
The most important thing, besides imagining your first cocktail party and where you’ll hang the Halloween decorations, is to make sure the house is safe, both structurally and environmentally. Here are a few issues to investigate before you move in:
Usually asbestos is found in homes built before 1980, so if you are considering a house that was built before then, ask for an asbestos test as part of your contract. Asbestos can hide in a lot of places, including insulation and vinyl tiles.
Most homes built before 1978 will have lead paint, but the test to find lead is invasive. Most sellers will provide a disclosure to buyers stating that the presence of lead-based paint is not known. If you are concerned about this as a buyer, you can test for lead-based paint once you purchase the property.
Radon is a colorless, odorless, tasteless radioactive gas that exists in the ground and can seep into your home through cracks and holes in the foundation. Radon gas can also contaminate well water. And radon can cause lung cancer. Fun, right? So, in a nutshell, request a radon test before buying.
Those trees in the front yard are gorgeous, but they could cause you problems in the future. Asking the seller to provide a sewer scope allows you to identify where a line is damaged and where roots may be entering or suffocating a pipe. And a scope will allow you to see how many areas in the pipe system need attention, which will determine if you’re looking at repair or replacement. As you can imagine, the word ‘replacement’ is much more costly than ‘repair.’
Talk To People:
Like the planning department, your neighbors, your realtor and the owners. The planning department can offer guidelines on what is and is not allowed for future renovations; so if you are buying this house with big plans to pop the top or extend the kitchen, be sure those projects will be approved before you buy.
And making inroads with the neighbors is always helpful; these are the people who can tell you what really happens on the block, how strict the HOA board is, and how the area has changed over the years.
Your realtor is on your side, always. But so are the current owners. Really. They want to sell you their house just as much as you want to buy it. So ask them for insight on the property, the previous owners, and any contractors and suppliers they used to update the space.
Finding your next home should be a dream, not a nightmare.
You know the saying: “If it sounds too good to be true, it’s probably a house flip.”
Isn’t that how it goes?
Okay, maybe that’s not the original phrase, but the house flip frenzy is still happening for the same reason diet pills and spray tans are popular – we like things to be fast and easy.
Flipping houses is a gamble; and as in gambling, sometimes you win and sometimes you lose. If the stars align and you find an underpriced house in a great neighborhood that needs a little TLC before hitting the market, you’re probably going to make some money.
But. . .
If you find that same house and then uncover the creeping mold, the cracked foundation and the sketchy electricity, you can say goodbye to your profit and your sanity.
Don’t get me wrong here – I am not against house flips. On a big, big scale it can be good for the seller, the buyer, and the neighborhood. After all, updating an eyesore and finding owners to love and cherish a property is a good thing.
Still, with television shows such as Property Brothers and Flip or Flop, with all of their fancy lighting, hunky contractors and 30-minute timeframe, it’s easy to get swept up in something that appears to be fast and easy when, in real life, it can be slow and really, really (really!) tough.
Planning on buying a ‘fix and flip?’ Here are a few tips to keep you in the money, instead of landing you in a money pit:
Rely on a Realtor and Other Professionals:
Realtors, real estate attorneys and accountants can help you navigate the dollars and sense of an investment. Could buying this house put your financial future in jeopardy? Or your other properties? Or your bank account? Before taking this step, recognize what’s at risk with you and your investments.
When it comes to the nuts and bolts of things, surround yourself with reputable, experienced professionals. Make sure all of your contractors and suppliers are licensed, insured, recommended, honest, trustworthy and competent. Also, work with people you like. You’re going to be working side-by-side on a huge project, and you want to get along with the people who are literally putting your house together.
Don’t Be a Hero:
If you have questions, ask. If you don’t agree with a suggestion from a friend, investment partner, supplier, speak up. If you don’t know how to rewire the water heater, don’t! Just don’t!
Do Your Due Diligence:
There are insurance policies for building repairs that all licensed contractors must hold in order to be in the business. There are specialty policies for buildings that are vacant or under construction. There are home warranties that can protect the appliances already in the home. Looking into insurance is just a way of looking out for yourself.
Look Under the Hood:
Hire the best inspector you can find and don’t balk on the cost. I promise that in the end this expense will actually save you money. An inspector knows what to look for, what is an easy fix and what is a nightmare. Stay away from the nightmare. Nightmares are…scary.
And Back to the Realtor:
No matter how great the house looks, if you don’t have a savvy Realtor on your side, it’s not going to sell. Look for a Realtor who has pulled comps for your neighborhood. Look for someone with experience, a solid marketing plan, a list of recommendations and a network of buyers and sellers.
This blog is a first in a series on the frenzy over fix and flips. Look for part two in the weeks ahead. In meantime, do you have a fantastic or frightening fix and flip story to share? Let’s hear it!
We are a proud of our state, aren’t we? Maybe even, dare I say, arrogant, when it comes to Colorado? After all, we boast over 300 days of sunshine, are home to the esteemed Air Force Academy, and live in a place so stunningly gorgeous that Katherine Lee Bates wrote “America The Beautiful” while drinking in the views from Pikes Peak. (We will get to ‘drinking’ later.)
Colfax Avenue is the longest continuous road in North America, we host the largest rodeo, the Great Sand Dunes are a national monument considering the 46,000 acre park was created over a million years ago from wind and ocean waters, and we are the only city to turn down an offer to host the Olympics – we did not want the cost or the pollution to damage our beloved Colorado.
But that’s just the beginning. Recent news has only added to our egos because:
We Have Brains:
“America’s Brain Health Index”, a study conducted by the National Center for Creative Aging — ranks Colorado third in the nation for brain health. Researchers examined 21 criteria, including everything from physical and mental health, diet and social well-being.
Coloradans earned their high ranking, the report says, by “taking care of their physical and mental health and maintaining a diet rich in DHA-fortified foods and supplements.”
We Have Jobs:
Denver ranks No. 1 for professional and technical job growth.
Denver is No. 3 — and Colorado is No. 4 — among the top 10 cities and states for job growth, according to an Arizona State University report.
Colorado also ranks No. 1 for the rate of growth of government jobs.
We Have Beer!:
Denver was recently voted as the 2nd best city for beer drinkers. Why? Because we have 154 breweries and lots of hip craft brews, including Denver Beer Co. and Great Divide Brewing. And we host the Great American Beer Festival, one of the largest beer events in the country.
We Have Equity In Our Homes:
A National Association of Realtors report proves that not only is Colorado a great place to live, it’s a great place to buy. The following 10 real estate markets have realized the greatest equity appreciation since the fourth quarter of 2010, due to relatively low prices, low mortgage rates, and investor demand
1. San Jose
2. San Francisco
4. Los Angeles
5. San Diego
9. Cape Coral-Fort Myers
So what does this mean for you? Well – you are smart, happy, employed, beer-loving people who should consider buying your next home! See how I did that?
All jokes aside, the real estate market is healthy and the trend seems to moving in the right direction. When it comes to purchasing or refinancing or even remodeling, investing in Colorado is a sure bet. And we didn’t even need a fancy report to tell us that.
A colleague outside of the real estate business recently asked me if he needed a Realtor when purchasing new construction.
Well – it depends.
If you are the type of person who can cut your own hair, perform your own knee surgery, or fit your own contact lenses, then no.
(And, also, you rock.)
If you are like the other 99.9 percent of the people in the world who happen to be great at some things, but not an expert in all things, then yes. A Realtor, even for a new build, is essential.
Why? Well, a Realtor works for you, not the builder. This means that your needs and wants are the number one priority during negotiation, purchase, construction and final walkthrough. A Realtor is looking out for you. A builder is looking out for the builder – aka: himself.
Here are some added benefits:
If you know where you want to live and the model build you want, you are ahead of the game. If you don’t, a Realtor can offer valuable, unbiased insight on floor plans, finishes, and even plot angles. A Realtor comes to the table with a vast amount of knowledge about the builder’s reputation and can help you avoid costly mistakes and long-lasting headaches.
Using a Realtor will not cost you extra money, but will save you dollars in the end. A Realtor’s commission is paid by the seller – in this case – the builder. But the Realtor is working for you, to protect you from unnecessary upgrades in the beginning and from not getting everything you’ve been promised in the end.
A Realtor has been through the process of buying before (probably dozens, if not hundreds of times). And while this may not be your first home purchase, it is still beneficial to have someone representing you in the transaction. And since you are the one who is spending your hard-earned money and you are the one who is waiting months for a new home and you are the one who is going to live in said home for the next chunk of years, it only benefits you to have someone on your side. Why be the Lone Ranger when you could have Tonto?
Final note: If you are touring a new construction model and the builder may ask you to ‘register’. It’s best to either decline this offer or tell the builder that you are already working with a Realtor and will be returning with him/her at a later date. Builders will always encourage buyers to spend on upgrades, and having a Realtor representing YOU will protect you and your bank account. Negotiating directly with a builder is doable, but not recommended – like cutting your own hair. Performing knee surgery on yourself. Fitting those lenses.
I recently remodeled one of my bathrooms and it was – um – fun.
Okay, maybe fun isn’t the right word. And, actually, maybe ‘remodel’ is too strong a word. Let’s say I gave my bathroom a mini-facelift – a whirlwind weekend that included paint, textiles, lighting, hardware, photographs and a really lovely scented candle. The scented candle was the nicest part. And the easiest. And the nicest. Did I already say that?
Why is it that the word remodel strikes fear in the heart of so many people – including me? Is it the angst of making a mistake? The concern over ROI? The dread of spending your hard-earned money on a toilet of all things?
For me, I am always looking at my home through my Realtor lens and wondering in my head (and, yes, out loud to my painters who kindly but firmly reminded me that Silver Chain Gray was, in fact, a great color) if buyers are going to love it.
The answer is – maybe. The bigger question is: is the expense and exhaustion from a major remodel, or even a lesser transformation, really worth it? When I was remodeling I didn’t discuss my plans with anyone else except me. On the flip side, when I was shaky about the color, I had nobody to blame but myself. I hate blaming myself. It’s less fun than blaming someone else.
So – should you do it or not?
The short answer is yes. If you are considering selling your house, updating your home is a good bet. You want your home to be the best and the brightest on the proverbial block, but you don’t want to exchange your good-looking house for the poorhouse.
Experts suggest taking an honest look at the outside to make sure it appeals to buyers –no matter how great the house is on the inside, nobody will ever see it if the outside is ugly. This is the same reason cupcakes are so popular and eel is not. Just saying. Do the windows need to be replaced or repaired? Would a new front door or at least a fresh coat of paint give the home a bit of sparkle? Be honest – or ask a trusted friend for insight.
Once you get past the freshly painted door, it’s the kitchen that buyers most want to see. If you’re selling now or sometime in the near future, remember to appeal to the masses, which includes stainless steel appliances, soft close drawers, a designated space for recycling and upgraded finishes. I have a client who recently upgraded her kitchen in a smart, budget-friendly way. By painting her cabinets and walls, adding new hardware, and investing in granite countertops, the space looks fresh and open. Even I was impressed and I’ve seen a lot of kitchens in my day. A MAJOR overhaul was not necessary since said kitchen, like many kitchens, was functional, just not fabulous. Had my client embarked on a huge remodel, her ROI would be slim and her mental state would be a bit – oh – compromised. And then she might have to live with me. And what if she didn’t like the paint in the bathroom? What if she was allergic to my new candle?
So, be brave my fellow homeowners! Tackle that tired bathroom, kick-up that kitchen and examine that exterior because the pros outweigh the cons. And that’s coming from a pro.