Flipping: 4 Avoidable Mistakes to Remember

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The potentially high-profit world of house flipping typically gets ambitious entrepreneurs going on the offensive. House-flipping profits reportedly topped an average of $67,000 in 2020, proving that the ambitious can certainly earn a good living in the industry.

But the other side of the coin doesn’t always trend in the news or social media. Inexperience and/or a lack of caution can sometimes cause otherwise savvy business people to make critical mistakes. If you are considering buying, renovating and selling homes for profit, it may be in your best interest to play a little defense. These rank among the most common mistakes that could cost you money.

1: Overpaying for a Property Cannot Be Undone

It’s not unusual for novice house-flippers to begin their property search in familiar places. These often include popular real estate apps and search engines. But only a few inexpensive homes in need of renovations appear. What happens next stands among the biggest mistakes. An eager house flipper buys the cheapest listed property.

Although it may make sense at the moment to select from inexpensive inventory, these houses are not often priced for resale. While some homeowners are looking for possible kindred spirits who want to take on a low-priced home and invest some DIY equity, don’t jump on the property just yet. Experienced professionals won’t buy unless the property cost and total rehab tally 70% or less of the expected resale price. The "70 Percent Rule" is a wise philosophy to adopt in the flipping business.

2: Not Having the Rehab Infrastructure in Place

Securing the right property makes up only part of the battle. To remodel it into a valuable and marketable asset, you will need the tools and people to get the job done. It’s not unusual for newly minted house flippers to try to nail down the equipment and necessary subcontractors after the fact. Lack of preparedness often results in the project taking too long to complete. Every day you own a fixer-upper is a day that money goes out the door. It’s essential to have the equipment and people in place before buying.

3: Beginning a Project Without Adequate Funding

People who enter the fix-and-flip world should probably have some experience in the construction sector, especially since new construction and rehab projects routinely run over budget.

Common reasons for overspending include increases in materials or labor costs. Sometimes unexpected structural or abatement issues arise that add to the job. Other times, subcontractors find themselves choosing between your project and another that will pay more money, in which case you may have to negotiate a new deal to keep your project on track. Anticipate that your contractors may add an additional 20% to their original estimate as a buffer for incidentals that may arise. 

4: Failure to Create an Exit Strategy

The business model involves buying low, renovating the home and selling it quickly for a profit. What happens when the property does not move? That’s a caveat that too many house flippers usually forget to consider.

Like any business proposition, there needs to be a fallback position that doesn’t involve a lender exercising a lien on the property or draining your resources. It may be worthwhile to set up lease-to-own options or converting the short-term fix-and-flip financing into a long-term mortgage.

4 Simple Ways to Save on Your Dream Home

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Building a new home is more affordable than many people realize, and it’s sometimes even cheaper to build new than to buy previously owned. Some tactics can make what’s already an affordable home solution even more affordable.

If you’re looking to build but are on a budget, here are four ways to save money on new home construction.

1. Build Smaller

Building smaller provides obvious cost-saving measures, as fewer materials and less time are needed to construct the house. You’ll also likely save on future property taxes if you build a smaller home, since property assessments often factor in a home’s size.

While building smaller leaves you with less square footage, the amount of useable space that’s sacrificed can often be kept minimal. A small home that’s well-designed for your family’s lifestyle and needs can actually provide more useable space than a larger home that’s not as thoughtfully laid out. A practical floor plan and custom built-in features can maximize a small home’s space.

2. Forgo the Upgrades

Custom-built homes come with many optional upgrades, and you’ll undoubtedly want some of them. Only get those upgrades that you truly need and fall within your budget. Any you don’t have the funds for when building can be delayed until a future date.

Remember, upgrades are not mandatory. If you find yourself questioning which ones would be right for you, don’t add any for the time being. Spending some time in your home as-is gives you time to experience the house and then decide what upgrades would be most beneficial for you.

3. Finalize Everything Up Front

Before breaking ground, check and confirm all of your chosen options. You should be entirely confident in the decisions, because changing them once construction starts usually increases costs. You’ll save money overall if you take the time necessary to make all of your chosen decisions prior to actually starting work on the job site.

4. Ask About Finishing Certain Aspects

Many aspects of new home construction require skill and expertise, and your home builder’s team should complete all such parts of the building process. Toward the end of construction, however, there are some finishing touches that aren’t as specialized. You may be able to save money on construction costs if you complete some of these final items yourself.

Talk with your home builder about what you might be able to do on your own and ask them how much you could save by doing the work yourself. Whether this is permitted varies from builder to builder, but it can help when builders allow. Landscaping, interior painting and appliance installations are all good items to consider, depending on your skill set, available time and personal interest. A builder may know of other finishing items you can do, too.

Benefits of Using Virtual Interior Design

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Interior design changes allow you to give your entire home or certain parts of your home a makeover. However, knowing which kinds of changes to make or which styles to use can seem overwhelming. You might also have a hard time picturing how distinct design elements would look in your home. Virtual interior design tools can make it much easier for you to figure out what changes you want to make to your home. Consider the following advantages to using virtual interior design for your home.

Save Time and Trouble

When you’re browsing through furniture options and other items, it’s not always easy to tell how they’ll actually look in your home. You might order a sofa or love seat that doesn’t match the rest of your decor or just doesn’t look right in your home, for example. With virtual interior design tools, you can see how certain items look in your house before purchasing them. This can help you avoid having to take the time to return items that don’t fit your interior design style.

Try Different Styles

If you don’t have style preferences, you might not know what you should go with. Using virtual design tools allows you play around with a variety of different interior design styles. This can help you discover which style or styles you prefer. If you’re having trouble choosing between a couple of different styles you like, virtual interior design tools can let you experiment with them to determine which one suits your home better. Once you know which style you prefer, you can get started on choosing paint colors, furniture and other items to make your interior design changes.

Work with What You Have

Some virtual interior design tools let you see how unique design elements might look in your home alongside your current furniture or other items. You might be able to upload photos and add design elements to them to see how they would look together. This can make it a lot easier to accurately visualize the interior design changes you’re thinking about doing. Without these virtual tools, you might have to take a chance on bringing new items into your home or painting rooms certain colors without knowing exactly how these design elements will end up looking.

Design Your Home Conveniently

Meeting with interior designers for consultations can take up valuable time. When you use virtual interior design tools, you can figure out the changes you want to make to your home at your own convenience. These tools allow you to work on interior design when it’s convenient for you and from the comfort of your own home. This means you won’t feel pressured to decide on interior design elements due to time constraints or have to arrange consultations that fit your schedule.

Save Money

Using virtual interior design tools could help you save on the cost of redesigning or redecorating your home. Professional designers might charge by the hour, which can add up if you’re unsure about the changes you want or if you’re changing your entire home. Virtual interior design tools let you experiment with different changes on your own, so you can redecorate without these added costs.

The Eco-Budget: How Living Exterior Features Reduce Homeowner Bills

Many of us have heard of a living or green wall. They’re excellent choices for reducing bills, counterbalancing emissions from basic home living and adding a beautiful touch of nature to your home’s exterior. But what are some of their other perks? Are there other external living features that can be applied to a home to further reduce your monthly utility bills?

Here are three external living features that will do just that, starting with the living wall.

Living Wall

Living walls are walls that have some sort of greenery attached to them. A common variety includes vines or ivy being gently guided along the siding of the home with a green facade or vertical trellis. Others include having the plant directly embedded into the structure of the siding or exterior panel.

Living walls are excellent at reducing noise from neighboring homes, other residents within the community or general life sounds. Other facets of living walls include temperature equalizing, which reduces the strain on your heating and cooling system. Since it isn’t working as often or as hard, living walls can also help you reduce your utility bills.

They’re also marvels at reducing fade damage from the sun or eventual erosion from rain, since the plants living on them require both to stay nourished.

Living Roof

Like living walls, living roofs are great for maintaining your roof. The plants keep the sun and harsh rain from damaging the exterior shingles or layering. However, living roofs offer another benefit: insulation. Living roofs help insulate the uppermost area of the home, the area that holds most of the heat during the warmer months. If you have central air, your system may work twice as hard with a conventional roof, even with proper attic insulation, than with a living one.

When working with proper upcycled or eco-friendly, insulating material, living roofs offer an outer layer or barrier of insulation. The outer insulation helps the inner insulation in the home keep up with the demands of the surrounding environment and further reduces the strain on in-home systems.

Living Floors (Grass Alternatives)

Living floors are typically alternatives to grass. Some grass species are invasive, while others can do tremendous amounts of harm to the soil, especially if not cared for. Living floors, like clovers or moss, may not provide the same type of savings, but they will do wonders for your lawn maintenance needs. For example, clovers and moss do not need excessive mowing and can be grown relatively easily with few resources, which will lower your water bill and the bill for new equipment like mowers or extensive weed whackers.

Living exterior features can improve your home’s value if your target demographic is among the emerging, eco-friendly group. With more homeowners looking for ways to save money while staying green, there’s no wonder why so many of these living exterior features are showing up on the market for a wide-range of homeowners with a wide range of budgets.

Renovating a Home: How Much Will My Remodel Cost?

Many hopeful homebuyers seek to save money by buying a fixer-upper and doing most of the renovations themselves. This is a proven method for those who have a knack for home improvement and aren’t afraid to get their hands dirty.

However, estimating the cost of a remodel can be difficult. There are many costs you may not be aware of, and others that are easy to go over budget on.

In this article, we’re going to talk about the cost of an average remodel, and some lesser-known costs that you might be forgetting to factor into your budget.

Average remodeling costs

As you might guess, the cost of a remodel can vary greatly. Things like the size of the home, the number of rooms you’re remodeling, and the type of repairs you’ll be making all factor into the equation.

Some repairs can be quite costly. Septic system replacements can cost several thousands of dollars depending on the type of system you need. And, if you’re buying an old home, you’ll need to look out for expensive fixes like asbestos removal and foundation damage.

According to one report, most Americans spent between $17,000 and $61,000 on their remodel, with the average renovation cost being around $37,000.

If you’re hiring a contractor for the bulk of your remodel, expect them to charge between 10% and 15% of the total cost.

Lesser known costs of a home renovation

Remodeling a home isn’t as simple as looking up a contractor and telling them to give you the bill once it’s finished, and that’s probably a good thing because odds are you would be shocked by the cost.

First, you’ll pay a contractor to do a walkthrough and estimate costs. Next, you’ll need to get any permits that are required for your renovations.

If you plan on doing the renovations yourself, there are a few costs you’ll need to consider. First, understand that you likely won’t be able to take advantage of all of the discounts that contractors can, meaning your building materials may be more expensive than expected. Similarly, the cost of tools for the project adds up quickly. And, when you make mistakes–we all do, we’re only human–you’ll be paying for it out of pocket.

Knowing your long term goals

An important consideration for a remodel is to look toward the future. Do you want to sell your home within the next few years? If so, you might consider going with less expensive materials–such as generic kitchen cabinets rather than custom-built–to save money while still increasing the value of the home.

However, if you plan on being in this home for decades or more, it may be worth the extra money now to make sure you are happy with your home for years to come.

Remodeling a home can be a memorable and rewarding endeavor. You get the chance to take a house that you see potential in and make it truly your own. Now that you know the costs, you’ll be better prepared for planning your home renovation.