Planning To Flip A House? Consider This First

Published: July 13, 2016, 5:42 p.m.

b"With Terry Story, 26-year veteran Real Estate Agent with Coldwell Banker in Boca Raton, FL

Although home sales are doing well these days, the home renovation business is thriving. Terry says there are two kinds of renovators out there\\u2014 first-time buyers fixing up older homes and long-time homeowners choosing to stay and fix up the place.
The largest group is the new home buyers who purchase older homes because of location or price and take on ambitious projects such as remodeling kitchens and bathrooms, adding on rooms, or major landscaping. Generally, they\\u2019re spending an average of $66,000 on such improvements.
The other group, those who have lived in the home for perhaps 25 years or so, spend about $36,000 making upgrades and enhancements as the alternative to moving.
Terry says this is an excellent time for anyone selling products or services for remodeling\\u2014contractors, carpet and flooring specialists, stores such as Lowe\\u2019s and Home Depot.
As a busy real estate agent, Terry often encounters problems that can derail a closing date on a home sale. Since few people can pay cash for a new home, for the most part, these delays or cancellations are related to issues with the buyer\\u2019s financing.\\xa0 Quite often, the buyer of a new home is faced with having to first or simultaneously sell their present home before being able to take on the costs for the new one. For some, bridge loans are an option as is tapping into a home equity line of credit. Terry\\u2019s advice to her clients is to have a plan in place should the timing not be so well coordinated.
In closing, Terry comments on the flipping phenomenon that was so prevalent back before the housing crash. Instead of buying and trying to flip a house,\\xa0as in the past, Terry says investors are buying, fixing, and then renting. Since rents are on the rise, this practice usually brings a good rate of return.
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Steve Pomeranz: It's time for Real Estate Round-up.\\xa0 This is the time every single week we get together with noted real estate agent Terry Story.\\xa0 Terry is a 27-year veteran with Coldwell Banker located in Boca Raton, Florida.\\xa0 Welcome back to the show, Terry.
Terry Story: Thanks for having me, Steve.
Steve Pomeranz: I know that home sales are doing rather well, but I think a lot of people these days are deciding to stay in their home and renovate.\\xa0 What's going on in the renovation market?\\xa0 Is there more than one type?
Terry Story: Absolutely, Steve.\\xa0 There are actually two kinds of renovators.\\xa0 What we're seeing, the largest group of people renovating are the new homeowners.\\xa0 They're taking on the larger projects, so somebody who just purchased a home and they want to redo it.\\xa0 They didn\\u2019t want to buy an old house.\\xa0 They wanted to buy something that is more centrally located, so they're buying that older home, turning into bigger projects.\\xa0 For example, they're remodeling the kitchens, that\\u2019s the most popular.\\xa0 Then they're tackling the bathrooms and then maybe doing curb-appeal projects such as painting the house, roof, et cetera.\\xa0 They're spending on average about $66,000 on homes.
Your next kind of home owner/renovator, they're spending about $36,000.\\xa0 That\\u2019s the person who's been in their house 25 years.\\xa0 They don\\u2019t really want to move, and they tend to tackle the projects on their own.\\xa0 They might not hire that general contractor, therefore, they tend to spend less.
Steve Pomeranz: Yeah.
Terry Story: The new home-buyer coming in spends a lot more than the current person currently living in the house.
Steve Pomeranz: Yeah, so this is a good time for anyone really in the local remodeling construction business, I guess, for people who sell flooring and those kinds of services as well.
Terry Story: Absolutely."