Although there is a lot of competition in the house flipping business, the increased availability of livable homes continues to struggle in meeting the demands of the market. Television shows such as Zombie House Flipping and 5-Day Flip show the creativity involved in transforming an abandoned house into one that could be considered inviting. They also portray a sense of speed through jump cuts and fast sequences in various montages of the hosts rebuilding and redecorating. The rush involved could make you wonder if they hired professional services for the important aspects of the home: electrical, water, sewage, and so on.
Nonetheless, they provide entertainment for the wishful homeowner, allowing the audience to imagine what could transpire during a home makeover.
There are three possible reasons house flippers want to get the job done as fast as possible:
Whether house flippers work on their own or not, every single day they spend on a flip adds weight to its expense. By speeding up the process, they can reduce the wages they have to pay themselves and their contractors, improving the overall margins of the build. This was also mentioned by the host of the 5-Day Flip as her main reason for developing a process that can get a house flip done in 5 days.
One of the key things to look out for before you decide to flip a house is the feasibility of the project within the time constraints as well as the allotted budget. The time spent on the project and its budget go hand-in-hand when determining the profitability of the flip and if it will be worth the effort of everyone involved. So, one of the methods used in determining a fast-flip is identifying and purchasing homes that require minimal demolition and reconstruction. In the industry, they call these houses “purely cosmetics” because the only expense that the house flipper needs to pay for will be the redecorating of the home.
While some houses tend to present a style from the previous decades, the interior design industry has developed leaps since then. New technology assisted in the uprising of modern aesthetics that could be pleasing to the senses of the homeowners. The incorporation of these novel presentations in older homes can teleport the house into the current century, allowing the house flipper and the real estate agent to evaluate the home at a higher price compared to when it was bought.
More Houses To Choose From
As soon as someone is done with a flip, they can move on to the next one. Therefore, they will have more houses to choose from the faster they complete their first venture because the sale of their previous flip can fund the purchase of the next flip as well as other expenses in the project. Furthermore, since a faster house flip leads to higher profits, it can also translate into more retained profit for the home renovation business, depending on the management style of the owner.
When a house flipper is stuck on a flip, they tend to be worried about the possibility of experiencing a sunken cost fallacy where the money they put into the renovations may never be returned. They face the risk of a massive loss unless they turn a profit on the sale, so they are left with no other choice but to put in more money into the build. Conversely, if they finish the project quickly, they can pay themselves, their contractors, and their agents and move on to a new set of houses for their next project.
The Right Timing
Since the real estate business is said to be about “Location, Location, Location”, it is also about timing. The longer a house flipper spends time on a flip, they could end up worrying about the potential number of potential buyers they could lose to their competitors. Being available to possible clients is key if they want to have the opportunity to sell against other real estate agents in the neighborhood. So, timing is crucial. House flippers know this and it could be a reason why they want to speed up the process of home renovation.
The house flipping business is the scavenger solution to a growing demand for homeownership. In an attempt to meet the insatiable demand of home buyers, house flippers have to develop a streamlined and efficient process that can ensure a faster turn-around time for their projects so that they can earn higher profits, work on other projects, and get to their clients on time.