The 6 stages of flipping a home

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Big but Risky Business of House Flipping


When we look for a flip house for our real estate investing business, Tarek and I basically go through the same thought process that anyone goes through when they buy an investment property.

Even though we're working on a shorter timeline than most homeowners, the journey is essentially the same.

Understanding our thoughts as we go through each step of the process might give you a clearer road map for your own fixer-upper journey, or it might inspire you to test the waters of real estate investing yourself.

Finding a great deal on a property

If you're looking for a really great deal on a fixer-upper house, you're going to be searching for a diamond in the rough, and that's exactly what we do.

We drive around the neighborhoods where we're most likely to find great flip houses. We search through the MLS. We take a look at listing sites like Zillow.

We basically search high and low, and as we find potential deals, we start doing research on them, just like you would with your home purchase.

There's something really special about finding a truly great house-flipping opportunity, and it always gets me a bit excited and a touch nervous at the same time.

I don't want to fall in love with a house before the seller accepts the offer. Yet, at the same time, I can't help but think about how we'll be helping someone get out from under a financial burden, and then benefiting the whole neighborhood with quality rehab work.

RELATED: 10 tiny home ideas for retirees:

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10 tiny homes for retirees
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10 tiny homes for retirees

1. New Hampshire Tiny Home

Price: $24,999

Size: 310 square feet

Location: Antrim and Alton, N.H.

If you’re just starting your tiny house search, this micro-cabin home might catch your eye, with its earthy vibe, and top-to-bottom wood interior and exterior. The one-bedroom, one-bath tiny home is perfect for retirees looking for low maintenance at an affordable price point.

“A tiny house has minimal recurring expenses, which will reduce the amount of money a retiree will need to draw from their retirement,” said Harrell.

The National Institute on Retirement Security found that 62 percent of people age 55 to 64 have saved less than one year of their income, far less than what’s needed to preserve their standard of living in retirement. So the reduced costs of a tiny home can be especially helpful.

New Hampshire ranks at the top of the list for best places to retire rich, according to a recent GOBankingRates study. There’s no sales tax, no Social Security income tax, no estate tax and no inheritance tax. The cost of living is higher than average, but a tiny house in retirement might change that.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

2. Idaho Tiny Home

Price: $15,500

Size: 160 square feet

Location: Hailey, Idaho

This charming, rustic tiny home is unfinished so you can add your personal flair. Or, you can use it as a studio or wood workshop for your retirement years.  This one-bedroom, one-bath micro-home on a trailer can also be taken anywhere.

You might just want to stay in Idaho, however, thanks to its extremely low cost of living. This state has some of the best perks in the country for retirees. Retire here and you’ll have higher-than-average deposit rates to grow savings. Residents also pay no Social Security, estate or inheritance taxes, and they have low sales and property taxes.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

3. Wisconsin Tiny Home

Price: $25,000

Size: 300 square feet

Location: Lomira, Wis.

“For folks considering retiring, but feel the numbers are right, a tiny house could be the difference between living comfortably and on the financial edge,” according to Hartwell.

Great homes can come in small packages. This home has two bedrooms, including a master bedroom just big enough to fit a queen-size bed. If you like openness, this tiny home has it, with vaulted ceilings in the main living area. Pine adorns the walls, giving the home an earthy feel. The house is not quite complete, which means you can put the finishing touches that matter most to you.

Perhaps in your golden years, you want to move around. This tiny home is on wheels, so you can park it where you want. Wisconsin would be a great place to consider living, however, as it has some of the best health care in the country. Not to mention, there’s no Social Security, estate or inheritance taxes. The sales tax rate is also one of the lowest.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

4. Wyoming Tiny Home

Price: $27,000

Size: 220 square feet

Location: Dubois, Wyo.

If you’re not ready for a one-level home, check out this beauty — a two-story modular post and beam tiny house. Although not quite complete, this one-bedroom, one-bath home can come with a porch and deck for you to enjoy at your leisure. You can customize it to your retirement liking.

Speaking of retirement, Wyoming is a great state for retirees. There’s no Social Security, estate or inheritance taxes, and it has low property and sales taxes. This tiny home is also quite a bargain in comparison to traditional housing in the state.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

5. Alaska Tiny Home

Price: $100,000

Size: 192 square feet

Location: Tenakee Springs, Alaska

This adorable Alaska cabin is located in the center of town, near historic sites like the Tenakee Springs bathhouse. This loft-bedroom cabin has a great ocean view, and could be a good spot for your retirement and sightseeing needs. You can visit the hot springs or go hunting.

Alaska is also the best state when it comes to taxes and retirees, according to the GOBankingRates study. There’s no Social Security, estate or inheritance taxes, and it has the lowest average sales tax rate of any state. Homes, however, are higher than average, so buying a tiny house in Alaska could be your best bet.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

6. South Dakota Tiny Home

Price: $19,500 and $10,500

Size: 200 square feet

Location: Spearfish, S.D.

Here are two options for a retiree: this South Dakota tiny home with a modern twist that’s move-in ready, or the same home unfinished inside for you to shape into your personal retirement haven.

Although the owner is willing to deliver the tiny home, South Dakota actually makes for a very fine retirement spot. For one, tax rates are low. And with higher-than-average cost of living, moving into a tiny house could really be a money saver.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

7. Michigan Tiny Home

Price: $55,000

Size: 400 square feet

Location: Traverse City, Mich.

If you’re looking for a vacation-style retirement home that is more customary in style, meet this 400-square-foot park model that’s fully furnished with one bedroom, one full bath, plus an additional 200-square-foot loft. Maybe the loft can be used for extra storage, an art studio or a place for grandkids to play.

Another great thing about this tiny house: location. Michigan is the cheapest state to live for retirees, according to the GOBankingRates study. In addition to lower living and housing expenses, insurance premiums are also pretty affordable, averaging $204.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

8. Utah Tiny Home

Price: $55,000

Size: 320 square feet

Location: Pleasant Grove, Utah

If you want low-maintenance living, you won’t have much upkeep with this modern one-bedroom, one-bath tiny home. There’s marble in the kitchen and bath, as well as laminate flooring. Modern siding on the exterior also helps to make it truly a home on wheels.

If Utah isn’t already a retirement sweet spot for you, then perhaps this will help: Retirees in Utah have lower-than-average property taxes, and no estate or inheritance taxes. Buying a tiny house is ideal, as traditional housing in Utah can be quite expensive.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

9. Arkansas Tiny Home

Price: $13,500

Size: 176 square feet

Location: Mountain View, Ark.

For those who prefer the woods, behold this micro-tiny home with a nature vibe. This house, however, is well equipped — with full insulation, wiring and plumbing — and offers two bed lofts. There’s also a two-burner cook top, so you won’t need to build a fire to cook.

Arkansas can also be a good choice for retirement. It’s actually quite ideal, with fairly low living expenses and tax rates.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

10. Florida Tiny Home

Price: $78,900

Size: 500 square feet

Location: Tampa, Fla.

If calling warm, sunny Florida in retirement sounds good to you, consider this sea-blue cottage house. It’s just one of the amazing floor plans available to be built by Home Care Suites. It’s fully customizable and built specifically with seniors in mind.

Florida can be a great option for retirees. Not only because of the beaches and endless sunsets, but also because there is no income, estate and inheritance tax.

Photo credit: GOBankingRates/Courtesy of TinyHouseListings.com

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The rush when a seller accepts your offer

After we find a house that has the potential to be a really fabulous flip property, we make the offer and hold our breath.

When the seller accepts the offer, I get a real rush! I immediately start thinking about when we can get inside, look at what the house needs, and get to work.

Before long, I have visions of beautiful design work floating through my head. In some ways, this is my favorite part of flipping a house, because it seems like the sky is the limit.

Courtesy of Zillow Digs.
Courtesy of Zillow Digs.

I think of everything I'd want to do to it if I had the money, but then - just like if I were buying a fixer-upper to move into - I have to bring myself back down to earth and remember our budget.

And that leads to one of the scariest parts of house flipping or buying a fixer-upper.

The fear when your contractor tells you ...

Whether it's a whole new roof, new electrical wiring, new plumbing, or any other major project, when one of our contractors tells me that they need to do a really expensive job that we didn't budget for when we bought the house, I get a little bit scared.

Before I know it, numbers are running through my head, and I have to take a step back and think about how much of the budget is going to be taken up by this surprise.

Then, as I get things in perspective, I look for places where we can save money and places where we can still splurge some to get the best results possible.

Sometimes you have to go a little bit over budget to get the job done, but as long as you don't eat up your entire margin, you'll be fine.

For Tarek and me, this is a matter of how much money we can make on a house flip. For a home buyer, it's a matter of how long renovations are going to take, when you can move in, and what needs to wait.

In either case, we're looking at some financial challenges, but they shouldn't be impossible to work around.

Deciding where to spend and where to save

Some of our house flips are in neighborhoods where you absolutely need real hardwood floors and marble countertops. In other areas, we can get away with high-quality laminate floors and quartz or another less expensive countertop material.

Whatever the case, I never use materials or appliances that I wouldn't be happy with in my own home.

That doesn't mean that I splurge on every little thing, though. I look at the places where a less expensive option will still create a beautiful finished product, and I go with those.

I also prioritize some rooms over others. For example, as you start your renovations, are you going to want to redo the kitchen and master bath first, or will the guest bedroom and living room take precedence?

Courtesy of Zillow Digs.
Courtesy of Zillow Digs.

Kitchens and bathrooms are the easiest places to make upgrades and create luxurious settings for home buyers. That's why I recommend doing these spaces first for your fixer-upper, just like we prioritize them for our flip houses.

Watching it all come together

After we've figured out the budget and worked out what needs to be done with our contractor, it's time to watch it all come together. In a surprisingly short time, we get to watch a distressed property transform into a beautiful, totally livable home.

It might take a little bit longer for you to do all of the work on your own home, but the process is the same, and it's really satisfying to watch your plans become reality.

Selling a house to excited buyers

We sell our houses right after we rehab them and you might live in yours for years, but, again, the outcome is the same.

After we put a lot of hard work and energy into a flip house, we get to sell it to an individual, couple, or family, and they're always really excited to move in.

We get to see their dreams come true as they buy their first house or their next house. When you sell your fixer-upper, it'll be your buyer's dream house, too.

When you look at it this way, house flippers and fixer-upper homeowners can learn a lot from each other!

Lead photo courtesy of Zillow Digs.

More from Zillow:
How to Build a Home Renovation Team You Can Trust
3 Reasons to Live in a New Home Before Renovating
Would You Flip for Flipping? Secrets, Scams and Successes

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