Sometimes less is more when doing a fix and flip. Maybe you should just do a “clean and list” instead. Suzanne with FasterFunds Lending covers a few different scenarios to think about when you find a great deal.
Most investors think that the only thing to do is to add bathrooms, remodel kitchens, replace all the flooring, paint the entire house, etc.
But sometimes an investor can net more profit and save a lot of time by just cleaning out the house and listing it below market value to let the new home owner fix what they want and how they want to.
There are several variables to go into this decision:
- What type of housing market are you currently in?
- What time of year are you in for the selling cycle?
- Is this house in a hot location?
- What shape or condition is the house currently in?
You will need to do the numbers to ultimately make the decision as to whether you should fix it up or just clean it up.
In this video, Suzanne talks about the considerations.
Transcription:
Hey is Suzanne from FasterFunds Lending, I’m here for your tip of the day.
Today we’re here looking at a house over in the Manchester / Ballwin area. And it’s in an area where all of the houses are all ranches or all split levels. But all of the ranches are slabs.
So, I knew initially before coming here before pulling comps that this was going to be a slab house.
So, when we walk in, you’re in the living room kind of looking into the kitchen but on one end of the house you have three bedrooms and one bath.
On the other end of the house you have your laundry room, your systems, and then a nice little half bath as well with a bonus center. What we have here in the middle is a very small kitchen with a really nice fireplace feeding right into the kitchen.
So, as we all look around, the house is in pretty good condition aside from some carpet stains, scuffs on the wall, and other than that it’s in really great shape.
When we’re looking at a house with some quirks but is also really clean, we have some options.
One is to do a full, normal rehab. Where you can mess around with the kitchen design, pull out some cabinets, knock out the fireplace, and anything really to make the kitchen not feel like a mini apartment kitchen.
You can also think through, you know, there’s an opportunity to put a half bathroom in the master, lots of options here, but what it comes down to is how much money do you want to sink in the house and how much time you want to sink in.
The second option you have on a house like this since it is so clean, with a great school district, and a really desirable part of town, is you can just do what we call a clean and list.
So, come here and either just list it as it sits or you could come in here fresh paint on the walls. The carpeting you can’t really see it super well, but the carpet is a little stained and kind of gross so you could just replace the flooring, paint the walls and list it that way.
So, it’s really important when you’re looking at a house like this. And you have a lot of options which is great. Is to take a step back, look at your purchase price, and then look at what the ARV options are or the after-repair value options if you list it as is. List with just some fresh paint and flooring or list with what the price would be if you did a full rehab.
Also remember to take into consideration your time with each of those rehabs. When you take the time to think about what would happen if you did one of those three things, it will become clear to you which is the best option.
With a house like this. We haven’t fully run numbers yet, but I believe that just a clean and list is probably the most desirable because the ROI. And the fall will be approaching which can be a slower market.
You can just take advantage of a nice quick sale. But always remember to think through those three things, especially when you’re in a house like this that is really clean and in a great district and a really good part of town.
So again, my name is Suzanne with FasterFunds Lending. Thanks for listening. Please remember to like us on Facebook if you haven’t already. Have a good day!
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