The Top 7 Things I’ve Learned Flipping Houses

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First, don’t call me a flipper. I know I just did it right there in the headline, but seriously, don’t. House flippers tend to get a bad rap. They’ve been labeled vultures who swoop in on a great deal and slap up cheap materials to turn the most profit possible.

That may be the model for some, but not for me.

I’ve been lovingly reviving older homes since 2006 when I started working on my own home and I’ve learned a thing or two along the way. Here are my top tips for a positive flip.

1. Be prepared to shell out the big bucks up front.

Reviving homes is expensive. We’re talking Cold. Hard. Cash.

You’ve got down payments, contractors, holding costs. It adds up very quickly, and everyone wants to be paid, like, yesterday. Be advised, the majority of these initial expenses need to actually be in the form of cash (not credit).

2. Try to be the only cook in your gutted kitchen.

Almost everyone you’ve ever met will have an opinion on the house you’re restoring. Don’t be surprised if your mom’s next door neighbor corners you in the driveway to let you know it would be “such a shame to rip out that original 1970s wood panelling because, you know, it’s really making a comeback.”

Don’t let extraneous voices pull you off track. You have to be the expert. Do your research, hold tight to your vision, and stick to your own timeline.

3. Numbers are your boyfriend.

I’m going to write something in all caps here. I promise I’m not shouting at you, but really, this is huge: KNOW YOUR NUMBERS. Okay, sorry, to come on so strong, but it’s really important.

It just so happens I luuuurve numbers. If you’re more naturally inclined to, say, letters or shapes, I’m telling you right now you’re going to want to cozy up to those numerals and get to know each other if you want to pull off a successful house remodel.

Here are the most important data to keep close at hand:

  • Your budget. Set it, memorize it, do not stray from it under any circumstances.
  • Your timeline. (See above).
  • Your holding costs. Taxes, insurance, mortgage payment, interest, utilities.
  • Your closing costs. Generally I plan 8% of the sales price, 6% for the rockstar agents that are going to sell your property, and 2% in miscellaneous fees, taxes, etc.
  • Income tax. Good ‘ol Uncle Sam is going to want a piece of the profit, obv. The amount of dough you’ll be shelling out varies depending on your status—individual, corporation, etc.—and what tax bracket you’re in. A good rule of thumb: plan for 25% of your profit. (FYI I’m SO not a tax attorney. Get yourself one of those for a more accurate picture of what you can expect to pay.)

Finally, it’s really important to understand the market (watch for a blog post on this down the line). Know what homebuyers will be willing to pay for your completed project and set your profit goals accordingly. Resist temptation to use best case scenarios in your projections. It’s an old adage, but one to live by—hope for the best, plan for the worst.

4. Choose wisely, grasshopper.

Much like flippers, contractors have been sidled with less than stellar reps. But listen, these guys (and gals) can make or break your reno project. A good contractor is like...every cheesy metaphor you’ve ever heard, embodied. (A contractor who will return your calls is worth two who don’t check their e-mail...buh-dum-bum-ching.)

I’ve had a professional relationship with Patrick Miller Construction for almost a decade now and they haven’t let me down.

Here’s why they rock: They are competitively priced, they stand behind every job they do and...wait for it…I trust them. Being able to trust the people you hire is huge when it comes to remodeling projects—big or small. It’s ultimately your cash on the line, and you want the people who work for you to care just as much as you do.

I can’t recommend PMC enough, but there are lots of great contractors out there. Here are a couple tips for sussing out the good guys.

  • Ask how busy they are. It’s hard to juggle a bunch of work at once, and contractors are notorious for taking on too many gigs. When things start to snowball for them, you may end up weeks behind schedule.
  • Get them to commit. If at all possible, work with your contractor to create a calendar you are both comfortable with, including a reasonable end date. A good contractor should be able to build in time for unexpected surprises.

5. Don’t mess with your rep.

Don’t cut corners. Just don’t. It’s largely what has gotten us into this whole bad reputation place. Hire people who do good work, use quality materials (hunt for bargains), be frugal but smart, and do work you will be proud of. You’re only as good as your reputation.

6. Shop smart, but splurge where it counts.

Nothing feels better than snagging an amazing deal, and that starts with knowing market rate for materials and then constantly keeping your eyes peeled for the best deals out there. Consider your client, too. Buyers for a $150K starter home aren’t going to want to shell out for a travertine custom built shower; while those in the $600k range expect such high-end amenities. 

Of course I love a good deal, but there are times when a splurge is okay. I recently installed a deep basin, stainless steel sink and higher-end faucet in a little 1940s charmer. I dropped about $500, and it was so worth it. Why? It’s a major selling point in the kitchen, and whoever buys the property will be grateful for the upgrade every day.

7. Rules were made to be broken—except when it comes to renovating a house.

Get your permits. (Do I need to shout again?) GET YOUR PERMITS. Follow the rules, keep everything above board, and keep your documents in order. Once you hit the market, buyers will scrutinize your work, and you’ll need to be able to back it up.