We see it all the time on TV: DIY’ers descend upon a humdrum home, identify its potential, purchase it dirt cheap, and then get cracking on a flurry of renovations. The end game? To sell high, a process known as flipping. Of course, the realities of HGTV don’t necessarily mimic the realities facing interior design professionals, so does it pay for you to do the same?
According to four professionals, the short answer is yes.
“The best thing about flipping is that you do not have a client whose personal taste and critique you must please,” explains Gail M. Davis, principal interior designer of her namesake South Orange, New Jersey, firm. “It boosts your bottom line financially, gives you visibility, and allows you to strengthen your creativity.”
Maryline Damour, cofounder of Kingston, New York–based Damour Drake and founder of Kingston Design Connection, echoes these sentiments: “When thinking about updating a floor plan or picking finishes, your only client is your target market, which means you have more freedom to design.”
While a flip project affords you more creative flexibility, it’s critical to not become too personally invested in the project. You cannot agonize over design decisions or fall in love with the project to the point where you don’t want to let it go. A few simple strategies can help designers to successfully flip houses.
1. Focus on the numbers
“Flipping homes is about margin. It’s a numbers game, and it’s important to never lose sight of that,” stresses Jaclyn Isaac, owner of Rutherford, New Jersey–based Downtown Decorators. “This is not an emotionally driven homeowner project that’s allowed to take years. You’re looking for a payout at the end of the day.”
Isaac stresses the importance of making design decisions quickly. For example, there’s no time to search for weeks for the perfect antique door for the pantry: “Brainstorm faster for an equivalent option,” she advises, adding, “Remember what your financial goals are.”
When Isaac and her husband embark on a flipping project, they expect a return of all the money spent plus 20 percent. “Some teams just want fast cash and spend as little as possible but get it to the market as fast as they can for a quick return,” she explains. “Some flips are just used to roll over the cash earned so as not to pay capital gains tax and keep money moving from property to property until the next high-return deal is found. A ‘successful’ flip returns money invested plus a profit for all involved—a ‘flop’ does not.”
In the same vein, Davis urges, “Be ruthless with your budget! The more you use on frivolous items—such as knocking down unnecessary walls—you will hurt your bottom line. Don’t go crazy reinventing the wheel.”
2. Work with the right team
Flipping houses can be a lucrative project for designers, but it’s necessary to work with the appropriate parties to make it happen. “It pays to flip houses if you have the right team,” Isaac says. “You need a realtor and contractor and investor who are all strategically aligned to make it work. And team members must be able to move quickly.”
Isaac says that it’s more common than not for many flippers to work with investors, who are private lenders looking to gain a better return on their money than they might get through a bank or stock market. “They provide funding in different ways, usually charging ‘points,’” she explains. “The longer you have to use their money, the better for them. Then the sale of the home is usually split among all parties unless otherwise negotiated. Some investors only want the interest on the money they lend.”
Damour recommends making friends with real estate agents. She says, “Agents can help find up-and-coming neighborhoods, help inform the design based on what they know buyers are looking for, and help navigate the logistics involved in flipping a house.”
Likewise, Houston-based interior designer and design blogger Carla Aston contends, “If you have a real estate license or partner with a realtor and if you have a contractor that can get you good deals on labor cost, then that would be a good mix.”
3. Know the market
Since you’re not designing for a specific homeowner but rather a potential buyer, it’s crucial to familiarize yourself with the market in which you’re buying. “Keep your ear to the ground, and be ready to grab a deal when you see it,” Aston offers, adding that oftentimes, the key is knowing about properties before they even go on the market. “You really need to get a property that is undervalued so you have room in the budget to affect some real change and make fixes as necessary.”
“Success in flipping a house is based on where you buy, how much you pay, and how much you can sell it for. If you don’t get that right, it doesn’t matter much what you do to the house,” Damour explains. “Know your demographic: It makes a difference to the floor plan and overall design whether you are building in an area filled with young families or retirees. And check out the interiors of homes in the area. Knowing your competition can help you budget your design dollars most effectively.”
4. Be judicious in your design decisions
When it’s renovation time, make sure you’re thinking broadly and making use of what the home already has to offer design-wise. “Identify unique features of the home that can be salvaged,” Isaac offers. “The simple strategy is to walk through with your contractor immediately, identify critical updates versus cosmetic, and crunch numbers quickly. I also have a folder with stunning design images that I know I can execute quickly and cheaply.”
Davis offers this priority list: “Fix what was done incorrectly, and restore the house to its original glory but modernized for current everyday living.” She recommends utilitarian updates, such as installing central air, updating the electrical and plumbing, and adding caulking and insulation rather than ripping out windows and doors.
Aston swears by the transformative power of paint throughout the house and recommends to instead put your money into the kitchen. She adds, “A slight upgrade in the master bath will work, but a gut to the full house will not likely render you a similar return on your investment.”
And make sure you don’t get overly trendy: “It’s important to incorporate updated yet timeless materials. It makes it easier to sell and maximizes the value of the house both for the house flipper and homebuyer,” says Damour.
5. Keep your eye on the prize
Though it may seem counterintuitive for any type A designer, it’s essential to focus on the big picture—to make a profit—rather than getting bogged down in achieving your unique aesthetic vision. “Sometimes people focus more on the design than the economics of flipping,” Damour says. “The ultimate goal is to manage risk and maximize returns. Every design decision I make on a flip project is based first on financial considerations. If it passes that test, then we move on.”
Source: Architectural Digest - Florida Real Estate Photography Blog - DeVore Design offers real estate photography, aerial photography and real estate videos from in Daytona Beach, Orlando, Lakeland and Tampa. We encourage you to share our content!