If the number one principle of house flipping is “You make your money when you buy the property” number two should be “Know your exit strategy when you buy”.
You should have a plan for how you are going to sell your house before you make your final decision to purchase the property. This will also determine how much or what you will do to the property in the long run.
Knowing what you are going to be doing with the property, for example, selling for profit, renting, using for yourself, will direct you as to how much you are going to fix and the amount you want to spend on it.
Obviously if you are buying to live in yourself and sell later, like in two years so you can take advantage of tax benefits, you are going to want to make it comfortable for you and may spend a little more on the material choices. You may even put in new kitchen and bath fixtures and cabinets.
Conversely if you are going for the quick flip, you will repair with an eye more towards the cosmetic fixes like paint and landscape that will give more curb appeal to the buyer.
Obviously in both cases you should bring everything up to code and fix any structural issues. But if you have done your homework, these shouldn’t be a problem with a quick flip where you have already factored that into the profit potential.
One of the other choices to sell your property can be the lease option. That will fall somewhere in between the “quick flip” and the “hold for two years strategy”. You will want the home to be problem free for rental years, at least, so you don’t keep getting call backs for repairs while the home is being rented.
You will repair with an eye towards longevity while not overdoing it in the upgrade department.
All in all, the better you buy the property and the more you know about your exit strategy, the more profit you will make on your investment.
By Robert Holiday