Flipping a house and selling it for huge profits seems easy. After all, we’ve seen reality TV shows doing it. But then again, those were just for show. Taking on a house rehab project isn’t always a good venture. Many newbie flippers end up spending more than they initially plan to and earning less than expected.
One way to ensure the success of your house-flipping project is to be wary of hidden costs. Whether you’re a novice house flipper or an experienced contractor, here are some expenses to watch out for:
Hiring professionals to do renovations and flip a property is an obvious cost. But there’s one more thing you have to factor in when budgeting: permit costs. And you’ll likely need multiple different permits, depending on the type of work your property requires to be livable and attractive for your target buyers.
If you fail to secure necessary permits, you may not pass inspections. This also means you can’t sell the house and get a return on your investment. So, when planning and budgeting, don’t forget about permits.
Lead and asbestos removal
Checking an old house to see whether you need experienced residential electrical services isn’t that difficult. The same can also be said for fixture repairs and other apparent issues that an old property may have. Some issues, however, can be hard to notice, especially if you fail to hire professional inspectors. These include lead and asbestos issues, which are common in homes built prior to the 1970s. At that time, construction companies weren’t aware of the different health risks associated with using these two building materials.
Before you purchase a house to flip, hire asbestos and lead-based paint inspections. If the inspectors found asbestos and lead, don’t bother buying the house as removing these materials during restoration can create a huge dent in your pocket. Avoid these additional costs as much as you can.
Septic system removal
Many house-flippers like to purchase properties in the countryside for lower costs, but this comes with a risk. Over the years, many rural homes upgraded their septic tanks to connect to the city sewer. This means an old rural home may be sitting on an unused or abandoned septic tank that can be costly to remove. Before you purchase a rural home, have the local health department check its existing sewer system to know whether you need to factor in a budget for sewer repair or septic tank removal.
Historical home restoration
Restoring a historical house may sound cool and profitable. But it can be an expensive proposition. Most materials that were originally used to build that home may no longer be available. Plus, if the house is located in a historic area, you may need to hire expensive tradespeople to ensure the house meets the requirements of the historical society. You may also run to delayed approval times for your plans. It’s better to leave this kind of house rehab project to bigger house-flipping companies or other investors.
Flipping a property is a profitable investment as long as you do it correctly. And one step to achieving that is to ensure your project stays within budget by avoiding these hidden costs of house flipping.