You made a profit. Mazel tov. Not everybody does.
Not all "flipping" involves renovation. In some markets, new properties get flipped even before construction is complete. The flipping mania is (was?) more a product of low interest rates and hot real estate markets than the profitability of renovation.
(BTW, please use proper quoting in your posts.)
There are 2 issues:
Making a profit
Making a quick sale:
A home needing work is more likely to remain on the market longer, sadly many see their neighbor sell for $X and figure their home is worth that much
Meanwhile the first home is turnkey perfect
Their home needs tons of work.
Then they wonder why its not selling and price cutting begins
Made an extra 18 compared to what? For you to know that you made an extra 18 you would have to have your house on the market and get several solid offers and use those to assess the highest amount you would get without renovating the kitchen, turn all of those offers down, do the renovation, and then receive an offer from one of those same buyers for 18,000 dollars more AND have that buyer tell you that the reason he offered the extra 18 was because of the renovation.
My theory is that you have absolutely no idea whether the renovation returned one cent more than if you had not done it. The above scenario being so implausible that there would be no way to know one way or the other.
Made an extra 18 compared to what? For you to know that you made an extra 18 you would have to have your house on the market and get several solid offers and use those to assess the highest amount you would get without renovating the kitchen, turn all of those offers down, do the renovation, and then receive an offer from one of those same buyers for 18,000 dollars more AND have that buyer tell you that the reason he offered the extra 18 was because of the renovation.
My theory is that you have absolutely no idea whether the renovation returned one cent more than if you had not done it. The above scenario being so
implausible that there would be no way to know one way or the other.
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Got estimates of sales price from realtor selling as it was. Took their suggestions, general fix up paint new kitchen W/appliances and carpeting small 2 bedroom home, added GFCIs and other minor buyers issues
Had realtors return and put on market at 32 grand more than initial estimate, final sale price 30 grand more than initial estimate.
With my cost of 12 grand my profit was 18 grand:) Plus house sold fast.
Pittsburgh is a slow market that hasnt seen the housing bubble of most of the country, many nice homes sell foir 150 grand, the home I sold was less, so percentage of sales price remodeling really effected the final profit.
It really doesnt matter what anyone makes on their home but I hate to see people lose potential big profit to save a few bucks:(
Now I see why you put in a 12K kitchen -- seems about right for a 150K house.
It sounds like you're leaving some costs out. You can correct these assumptions, of course, but let's say one were interested in "flipping" a house like the one you describe. Costs you didn't mention are settlement costs -- agent fees to begin with average about 5%, and that's when you buy it and when you sell it; if we adopt the convention that you bear half these costs, that's $7500; add other fees and taxes and you're at least up to $10K between the two transactions. Now let's assume it took you three months to "flip" the house. You're paying the mortgage for three months -- that's another $3000, say. So now we've hit $13,000. What else is missing? What about all the time you put into the house? You probably put a couple hours a week in, between shopping for the kitchen, talking to agents, cleaning, painting, and doing other odd jobs around the house. What about the value of your time? How much do you make an hour? $20? $30? 13 weeks x 2 hours x $25 = $650. Prorated property taxes, utilities for three months, etc. What are we up to? $14K?
Sounds like you made $4K. Not bad, but not the slam-dunk you're portraying. It's probably true that there are some arbitrage between the turn-key crowd and the bottom feeder crowd in general. (From the buyer's side, you can exploit this by buying a fixer-upper.)
Congratulations on your success, but I don't think it's as obvious as you say that the OP should follow your example.
Now I see why you put in a 12K kitchen -- seems about right for a 150K house.
It sounds like you're leaving some costs out. You can correct these assumptions, of course, but let's say one were interested in "flipping"
a house like the one you describe. Costs you didn't mention are settlement costs -- agent fees to begin with average about 5%, and that's when you buy it and when you sell it; if we adopt the convention
that you bear half these costs, that's $7500; add other fees and taxes and you're at least up to $10K between the two transactions. Now let's
assume it took you three months to "flip" the house. You're paying the
mortgage for three months -- that's another $3000, say. So now we've hit $13,000. What else is missing? What about all the time you put into the house? You probably put a couple hours a week in, between shopping for the kitchen, talking to agents, cleaning, painting, and doing other odd jobs around the house. What about the value of your time? How much do you make an hour? $20? $30? 13 weeks x 2 hours x $25 = $650. Prorated property taxes, utilities for three months, etc. What are we up to? $14K?
Sounds like you made $4K. Not bad, but not the slam-dunk you're portraying. It's probably true that there are some arbitrage between the turn-key crowd and the bottom feeder crowd in general. (From the buyer's side, you can exploit this by buying a fixer-upper.)
Congratulations on your success, but I don't think it's as obvious as you say that the OP should follow your example.
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It wasnt a flip, it was my moms who had died. Completely paid for solid home, but needed work. I put a LOT of hours in, but got them all out at the time of sale. I think its closer to what a regular homeowner goes thru. buy house, live in house, use house, abuse house.
now when the time to sell comes what to do?
On another thing the $150K house here would be FAR more in other parts of the country.The pittsburgh areas lost about 1/3 of its population in the last 25 years, so theres little demand for housing, the entire area is depressed. very sad. nice friendly people though, with affordable housing.
My in laws are trying to sell a home in fredrick MD. house just 6 years old, pristine condition, brother in law got job with navy NCIS, like the tv show. Its been on the market since october, price dropped 3 times. housing market has collapsed there, open houses have zero shoppers. they will end up giving away house just to moive on:(
Nearly EVERYONE HERE is a DIY person! So we probably enjoy remodeling and putting our mark on homes.
But 90% of house shoppers want a turnkey home!
By avoiding fixing up a house you are cutting the percentage of shoppers by 90%:(
Hey if you want less $$$ go right ahead, its yours to waste and doesnt effect me in the least!
Any number of sources will tell you that you will typically only recover a portion of the cost of a major home renovation when the house is sold - typically around 65-75% of the cost of the renovation.
Yes, it's possible to do a renovation and make a profit on the house sale, but it's hard to figure out how much of the "profit" is a result of the renos, and how much of it is due to other factors (i.e. a rising housing market, etc.).
House flipping is popular today because the real estate market has been rising sharply over the past few years in most markets. Flipping doesn't seem too popular when housing prices are dropping.
Renovations are a pain in the ass to live through. It's one thing to renovate a place that you aren't planning on living in, but the original question in this thread dealt with the person's own home. Why somebody would live through a kitchen renovation just to make a few extra bucks on the home sale is beyond me, but I suppose it takes all kinds...
The disclaimer basically says that you don't have to tell the buyer anything. As a buyer, it's a damn scary document to see attached to the contract, but it's "the way they do it" around here and you have to.
-rev
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