Flipping Houses: Repair or Retail?
Everyone in the business of flipping houses will eventually come across a real estate investment that needs so much work that it might seem easier to sell it “as is” rather than performing the extensive remodeling necessary to get a market price. While you can still find a buyer either way, making the wrong decision could end up losing you thousands on closing day. Here’s a guide to help decide which option is best for you:
- Cosmetic Damage. If your house needs new drywall, carpeting or other cosmetic repairs, you might be tempted to sell “as is” and save yourself the effort of fixing it all yourself. This is not a good idea. If you list a home in need of a new roof or windows, you’ll end up losing at least twice what it costs to repair the damage. These projects are the best way to turn your investment into income, so you should always choose repair.
- Structural Damage. On the other hand, repairing a house with broken support beams or leaning walls often takes more money than it’s worth. If you’ve discovered that the fixer-upper you bought is only a hair’s breadth away from being condemned, it’s best to accept your loss and retail it.
- Missing or Damaged Appliances. Like cosmetic damage, appliances are always worth repairing. It costs only a few hundred dollars to repair or replace an old dishwasher, but you can lose thousands if you take no action. Repairing your appliances and replacing your linens are mandatory steps if you plan to list your home on the market.
When it comes to deciding whether to retail or repair a home, the bottom line is that repairs are always worth it unless you are physically or financially unable to do them. You can make a bigger profit by fixing up a home than by selling it as a project for someone else.