5 House Flipping Expenses Smart Investors Always Anticipate
Getting ready to purchase your first investment property?
When it comes to flipping houses, most new investors tend to immediately focus on cosmetic upgrades: projects like installing new flooring, adding new cabinets to the kitchen and bathrooms, upgrading light fixtures, applying fresh paint, and landscaping are among the first items first-time investors often consider.
And while there’s no denying the value these projects add to a property, it’s always important to understand which additional costs will come up along the way.
Learning how to create a realistic budget is an absolute must for anyone who intends to earn money flipping houses.
Budget For These 5 Common Expenses To Start Flipping Houses Like A Pro
1. Closing Costs And Professional Fees
First and foremost, there’s the costs of both purchasing and reselling the home— which includes paying your real estate attorney and a licensed real estate agent.
Additional closing costs will vary slightly when you buy an investment property (versus a typical home purchase), but below are just some common examples of expenses that may come up:
- Title search & title insurance
- Pest inspection
- Home inspection
- Property survey
2. Plumbing Repairs
Hiring a home inspector prior to purchasing a property is always a necessity, regardless of whether you’re buying an investment property or a home you intend to live in yourself.
And while your home inspector may be able to point out potential reasons for concern, it’s important to keep in mind that most flips require a minimum of 6-8 weeks to complete— and just about anything can happen in that timeframe.
So, even if your current remodeling plans don’t involve making changes to the existing plumbing, it’s always helpful to set aside funds for unplanned plumbing emergencies (i.e., frozen or corroded pipes, clogged drains, etc.)
3. Electrical Inspection And Rewiring
If you’re purchasing an older home especially, chances are there’s outdated, damaged, or flat-out faulty wiring hiding behind the walls. In addition to hiring a home inspector, you’ll want to also have a licensed electrician check over the property to provide you with a list of any potential safety hazards, as well as an estimate for the repair costs.
Of course, in the event that your investment property does require electrical repairs, this should be the very first project you complete (with the assistance of a licensed professional) after you’ve closed on the property.
4. HVAC Inspection, Repairs, And Upgrades
Depending on the climate and local laws, you may or may not find it necessary to install central air conditioning. Nevertheless, buyers are almost always more inclined to pay asking price (or even more) for a home that already has A/C.
Heating, on the other hand, is always a necessity.
For this reason, we can’t emphasize enough the importance of hiring a licensed HVAC professional to perform a thorough inspection early on. This way, you’ll know right from the start how much cash you’ll need to set aside for heating or A/C repairs.
5. Water Damage Repair
Roofing, concrete, flooring, rot, mold
Homes that have withstood natural disasters or sat unoccupied for an extended period of time often have some degree of water damage. As you can imagine, water damage can create a multitude of issues, affecting everything from the home’s foundation up to the roof. Costs associated with water damage often include (but are not limited to) the following:
- Mold remediation
- Roofing repairs
- Pipe replacements
- Chimney repairs
- Wood rot repairs
- Concrete work (i.e., to repair foundation cracks)
- Yard drainage
If your investment property shows signs of water damage, be sure to create a list of all affected areas, and call a professional to inspect the home for mold as soon as possible.
Make The Most Of Your Budget When You Purchase A Property Through CastleRock!
If you’re looking for an affordably-priced house to flip, check out our nationwide inventory of newly-listed homes for sale, and don’t forget to ask our friendly staff about CastleRock’s special discounts for cash buyers.