Investing in a property with the intention of upgrading it and selling it for a profit is an excellent way to make money in real estate. This process, also known as real estate rehabbing, consists of finding a property, assessing all areas, making the necessary repairs, marketing the property, and selling the property for, hopefully, a profit. You are probably familiar with this real estate exit strategy from popular TV shows on HGTV; however, the process is not as easy as TV may make it seem.
Not to worry, our “flipping a house” checklist was designed to help you succeed. Please continue reading for the house rehab checklist everyone can use moving forward — from professionals to novices.
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How To Flip A House FAQ
Due to the popularity of flipping houses, this exit strategy can be an intimidating prospect for aspiring real estate investors. However, be careful not to let common misconceptions prevent you from pursuing your goals. Before you decide whether or not you’re ready to dive into the house flipping world, let’s get a few commonly asked questions out of the way.
What is the 70 rule in house flipping?
The 70 rule in house flipping can be used to determine a maximum purchase price of a given property by accounting for repairs and closing costs. To calculate it, multiply the after repair value (ARV) by 70 percent and then subtract estimated repair costs.
Can you really flip houses with no money?
It is entirely possible to flip houses with little to no money, you just need to be ready to pursue creative financing options. Investors can rely on private money, a business partnership or even hard money lenders to finance deals.
How much money do you need to start flipping houses?
The amount of money need to start flipping houses will depend on your financial situation and real estate market. Keep in mind there are a number of sources to help estimate costs and raise capital.
Do you need a license to flip houses?
There is not a specific license to flip houses; however, regulations will vary depending on your state. There are also a number of certifications investors may find helpful, such as a contractor’s license or real estate license.
What Is A House Rehab Scope Of Work?
A scope of work is an essential document that lists the projects to be completed on a rehab property in careful detail; no property rehab checklist should come without one. One might even think of a scope of work as a “house flipping checklist” of sorts that helps the investor communicate to contractors exactly what needs to be done, and how.
In the section below, you will find a house flipping worksheet that is designed to help investors know exactly what to look for and check as they perform their walkthrough. Upon using this rehab a house checklist, you yourself should be able to create a list of specific areas of a property that needs work. This can then form the foundation of the scope of work. The scope of work document will take this list further by specifying exactly how each line item is to be repaired or rehabbed, with detailed instructions on how to do so, including what materials to use. As a result, this document serves as a critical ‘flipping a house’ checklist that will allow any real estate rehab team to achieve success. To get started, follow the real estate rehab checklist below.
10-Step House Flipping Checklist
Pull comparables from the MLS and other websites: No rehab project can start without a proper vision of the final product. Research your market area using the MLS or websites that pull from it (like Zillow and Redfin) to find similar properties. Pay attention to the number of rooms and types of features offered in comparables, as well as the listing price. Not only will this help you gather inspiration for your rehab, but it will also help ensure the finished property is in line with similar properties—a crucial factor for selling the home quickly, and for your asking price.
Find a contractor and bring them to the property walkthrough: To hone in on a timeline and budget for your property, have your contractor walk through the property. Better yet, have a few contractors walk through so you can ensure you select the right person for the job. Be sure to share your expectations for the project, note of your ideal timeline, and don’t be afraid to ask questions. The right contractor will help your project run smoothly from start to finish, making this part of the process is crucial.
Bring essential tools like a camera and flashlight: Don’t show up to your walk through empty handed. Investors should always bring a camera, flashlight, calculator, and a notepad to any property walkthrough. Take pictures as you look around, so you can reference certain rooms and areas later. Write down any potential concerns you have, as well as extra projects you would like to see completed. The more thorough you are now, the more prepared you will be in the future when the project actually kicks off.
Review the exterior, paying careful attention to structural issues: Walk the perimeter of the house more than once. Keep an eye out for any cracks or issues with the foundation, as well as any exterior issues that may be present. Check the status of any fences, decks or outdoor areas as well, as these will factor into the curb appeal later on. This step will help make sure all any big problems are out in the open before you start.
Check interior walls for layout and cosmetic changes: You’ve heard it before, and you’ll hear it again: today’s buyers are looking for an open floor plan. If your property has a boxy layout or unnecessary rooms look for opportunities to open the space up. Is there a wall between the kitchen and living room? What about any awkwardly placed closets? Be sure to consult your contractor on which walls are load bearing. This will help guide what you can do with the property’s interior.
Decide what type of flooring will suite the property: As you survey the interior, take note of the condition of the flooring. What materials are used throughout the house: tile, laminate, hardwood or carpet? Refer back to the comparable properties you found earlier, and get an idea of what potential buyers in the area might expect. Then, price out options that will look right with what you plan to do to the space.
Survey kitchen and bathroom fixtures: Buyers will go straight for kitchens and bathrooms when touring a new property, making these crucial areas of your home. However, they can be highly expensive to renovate. To make sure your property delivers without breaking your bank, take note of any existing features that could be repurposed to fit your final look. Check the condition of any cabinetry, counters and appliances to see what should stay. In some cases, a fresh paint job and new hardware will be enough to revamp a kitchen or bathroom, while other properties may require more significant upgrades.
Review the condition of the electrical, plumbing and HVAC systems: Work with a professional as you survey the quality of the electrical, plumbing and HVAC systems. Then, decide which areas need to be replaced, upgraded, or simply cleaned up. This is a crucial selling point, so don’t try and cut any corners as you finish up your rehab project.
Examine interior doors and trimming: Don’t skip over the details as you finish up this house flipping checklist. Double check the doors, trim and hardware throughout your property for any last minute changes. The doors should all be the same style and color, and the trim should flow when moving from room to room. Assess the condition of all the doors to make sure you don’t leave anything out of your final review.
Stage the property and get ready to sell: The most important factor when showing your property is creating a space that potential buyers can picture themselves living in. Hire a staging company or set up the property yourself (if you think you can) and create an atmosphere that feels like “home” to anyone that walks through the doors. You may not need to stage every room of the property, but key areas should be prepared for potential buyers with care.
The best way to succeed as a real estate rehabber is to mind your due diligence before getting started in any deal. You must draft your business plan, find the perfect contractor, and learn how to market the finished property. Estimating the repairs for a given property takes experience and expertise, which is why every real estate rehabber should have their own “flipping a house checklist” on hand. I also want to encourage you to craft a real estate rehab business plan.
During your first few years as an investor, it is never a bad idea to keep several handy real estate checklists in hand. In his book “The Checklist Manifesto,” acclaimed medical surgeon and author Atul Gawande discusses how carefully designed checklists helped transform the medical system in the U.S., helping save more lives. His writings make you wonder, what could unfold if even the most seasoned professionals in other industries also enacted the use of simple checklists? It is no secret that any process in the real estate industry is complex, involving many steps and sometimes many people. When a lot is at stake, making use of a rehab checklist to ensure complete thoroughness and accuracy is not only helpful, but a smart business decision.
This idea, of course, applies just as well to when you first getting started on a rehab project. Never be caught off guard by a slow moving team or problems with the foundation again. Check off every item on this rehab a house checklist for flipping a house and you can be sure you won’t miss a thing:
Rehab properties can offer attractive profit margins to real estate investors willing to execute the right steps. If you find yourself eager to pursue this exit strategy, familiarize yourself with our flipping a house checklist to make sure you’re prepared for the process. Be careful not to underestimate the workload of flipping a house and read up on commonly asked questions to educate yourself. If you put work in, rehabbing houses has the potential to offer you a strong financial future.
Did you find this house rehab checklist and corresponding pro tips helpful? Is there anything you would to see added? Let us know in the comments below.