Flipping houses, how much profit to expect after remodeling?

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Since my family has a lot of contacts for labor and supplies in the home remodeling department, I was wondering about the viability of flipping beat up houses after remodeling them.

Does anyone have any experience with this?

[DcifrThs]

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Since my family has a lot of contacts for labor and supplies in the home remodeling department, I was wondering about the viability of flipping beat up houses after remodeling them.

Does anyone have any experience with this?

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i wish i could give a better answer than this but:

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it depends

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Barron

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What kinds of variables does it depend on?

Suppose we buy a house for $500k, and remodel it completely -- I'm talking all walls painted, all hardwood floors, kitchen cabinets, tiles and all bathrooms with new sinks, faucets, glass showers, wall tiles, maybe even the patio.

How much can I expect the house to sell for after the work?

[hawk59]

There's really no reason to expect the house to sell for more than the purchase price + the amount of money you spend to remodel. The whole concept of fixing up and flipping houses became popular as a direct result of the real estate boom. But the money wasn't made because of the remodeling, it was made because the real estate market was increasing at a very high rate in the time it took to remodel then sell the house.

Maybe you will say that you can get a really good deal on labor because of your contacts and you can realize a profit that way which might be true, but then you'd really just be in the remodeling busines except that you'd have to put up a lot of capital upfront to buy the house and expose to yourself to a lot of risk if things don't work out.

[jaydub]

[ QUOTE ]
What kinds of variables does it depend on?

Suppose we buy a house for $500k, and remodel it completely -- I'm talking all walls painted, all hardwood floors, kitchen cabinets, tiles and all bathrooms with new sinks, faucets, glass showers, wall tiles, maybe even the patio.

How much can I expect the house to sell for after the work?

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$500K plus or minus $100K

J

[SanONeill]

I would research this a lot more with real estate professionals in the area you plan to work. Revamping the whole house will cost a lot of money and 50% of the things you do won't add value to the house in the end. Try to find the few things that will add a lot of value and just do those.

[maxtower]

Most of the money made in flipping houses is by purchasing the house at below market prices. While the RE market isn't perfectly efficient, most buyers and agents are intelligent enough to figure out how to discount a house for the work that needs to be done.

Obviously you'll get the most bang for your buck by repairing the cheapest things that make the largest visual impact, but I think most of the real money is made by working hard to find properties at below market. Flippers will then do the remodel to just sell it for top dollar.

[thehun69]

The advice here is to study the market that you want to flip houses in. That is the real key to how successful you will be. Without knowing the market, you will never know how much money you can make. Is the market rising? Falling? Flat? Are people moving in or moving out? By the market, it is the local geographic area that you plan to flip in and not "THE REAL ESTATE MARKET", where people tend to generalize national trends to local areas. Understand the market. Study it. Speak with real estate brokers to know the area. Drive around in the area..all of it. Also understand that there is no "easy flip" and that you will need to understand the notion of carrying costs, interest costs, lawyers fee, agents fees, insurance and a whole host of soft costs that they really don't go over in the "Flip this house" type of shows.

All of those variables will affect the profit you make. No one can give you a reasonable answer to your question without knowing all of those details.

THE HUN.

[jws43yale]

A good friends on mines Dad does this in Dallas suburbs and makes very solid money doing it $400k per year. He actually does a good portion of the work himself or with cheaply paid help instead of hiring others to do it. I know that they look for poorly maintained or out of date houses in great locations that will go below market. The renovation takes the property from an unattractive one to a highly attractive one.

[DrewDevil]

You have to buy the house at a steep discount to make decent money. Your purchase price cannot be more than 80% FMV minus repair costs, or you will struggle to make any profit whatsoever.