The most successful flips are those projects that maximize profitability. However, choosing the wrong projects can increase your cost and lower the return on investment (ROI) of your fix and flip project. We talked to the pros and found the top fix and flip projects to avoid if you want to maximize profits.
Here are the 25 fix and flip projects to avoid on your next investment:
1. Making the House the Nicest in the Neighborhood
Monica D. Higgins, Construction Manager & Founder, MonicaDHiggins.com
When fixing and flipping a house, the goal is to get an attractive return on your investment but not to make the house the nicest one in the neighborhood. You want to avoid adding unnecessary features that do not exactly fit the style of the neighborhood. Select floor plans, finish materials, and colors that are neutral and appeal to the masses.
2. Over-Doing the Landscape
Patrick McLoughlin, Owner, Respray Services
Landscaping is an important feature of a house as it’s a potential buyers’ first impression of your fix and flip. A simple retouch on the lawn and adding some fresh, low-maintenance plants will do. Adding expensive landscape features, such as a fountain, may be an unnecessary cost that lowers your potential ROI.
3. Homes with Major Structural Problems
Richard Frazao, Professional Engineer, Quaketek
Homes with major structural problems are a double-edged sword – they can either be very profitable or very costly to fix. There is high risk involved for fix and flippers who buy homes with structural issues because there are often problems associated with it. It’s best to avoid fix and flip properties with large structural problems unless you’re an experienced flipper.
4. Using Colors that are Too Bright or Heavy
Patricia Ofori, Real Estate Professional & Investor, DCRE Residential
The color palette is an important aspect of a home. It should provide a sense of calm to the homeowners and their guests. Using colors that are too bright or too heavy can leave buyers uneasy, especially if these colors are not on the neutral side. Avoid using colors of your preference and instead consider the house’s ambiance, the neighborhood, and the general taste of the buyers when choosing colors.
5. Investing in Luxury Features
Jonathan Self, Real Estate Broker, Center Coast Realty
When renovating a house for a flip, it’s best to see the property through an average buyer’s eyes. Investing in few extra features such as a luxury rainfall steam shower, an electronic temperature control, or an extra bedroom is an additional cost that may be unnecessary. Some buyers may not even find these features valuable. Let your future buyer decide what they want to upgrade once they move in.
6. Homes with Roof Issues
Ryan Stewman, CEO, Hardcore Closer
Avoid buying homes with roof issues as the roof is generally one of the most expensive repairs of a fix and flip. Aside from it being too costly, repairing a house’s roof is also one of the most difficult and time-consuming projects for a fix and flip, and it can cause you headaches along the way.
7. Upgrades That are Not Visible
Spencer Chambers, CEO, The Chambers Organization
The average homebuyer will not see the value of upgrades that are not visible to their eyes, such as re-plumbing or changing the old piping from copper to PEX. Most homebuyers are not likely to pay for such upgrades, so it’s best to avoid any unnecessary repairs or renovations that do not result in a quick, visible return to a potential buyer.
8. Extra Features in the Living and Dining Rooms
Buzz Tatom, Sales Partner, Venture West Ranches
Be careful about adding extra features in the living and dining rooms. For example, built-ins are not normally a good investment. Also, consider whether decorative accents such as beams are necessary. They are great and can help the house sell faster, but you may have a hard time recouping the investment.
9. Installing Flashy Appliances
Mitch Durfee, Author & Keynote Speaker, MitchDurfee.com
Avoid going overboard with fancy and expensive appliances as these increase the cost of your property while adding little value. Most buyers would prefer less expensive appliances that are just as functional. Using stainless steel appliances is more practical and less costly, and most buyers prefer their sleek and classy look.
10. Adding a Steam RoomSpyglass Lending
Aaron Pfeffer, Hard Money/Private Money Broker, Spyglass Lending
Vanity additions like a steam room are good in palatial mansions, but may not sound practical for fix and flip properties, especially when it doesn’t fit the aesthetics of the home and the neighborhood. A steam room may be too costly and needs high maintenance. Though it will make the house look and feel more luxurious, it will only limit your potential buyers to those who prefer luxury.
11. Busy & Overwhelming Finishes
Karen Gray Plaisted, Professional Property Designer, Design Solutions KGP
Too many flippers are trying too hard with finishes, adding busy marble countertops and crazy tile backsplashes, which can become overwhelming. If a flipper is not skilled in design, they will end up with finishes that do not complement each other, or with a design that don’t suit the house and the neighborhood. Keep it simple and classic, but add an interesting factor to it, like a pattern on the tile.
12. Investing in a Theater Room
Rhianna Miller, Home & Garden Design Expert, Rubber Mulch
Avoid projects for fix and flips that will cost too much, are unnecessary, and won’t provide more return in terms of revenue. For instance, adding a theater room and investing in home theater appliances are just too much for a fix and flip project. They are considered as unnecessary costs and will generally not provide additional value to the property.
13. Buying a Property on a Busy Road
Ethan Roberts, Real Estate Writer & Investor, Auction.com
A home located right beside a busy main road can be both dangerous and disturbing. Family homebuyers who have small children will likely not consider living in a house on a busy road with lots of vehicles. Your fix and flip will lose out on potential buyers because the location is perceived as dangerous, noisier, and more congested with traffic.
Repairing or replacing a home’s siding can be very expensive. According to Patch of Land, siding replacement can cost over $10,000, depending on the size of the house. Buying a house with severe siding damage may not be very practical for a fix and flip, especially if this house has other issues that need to be taken care of.
Fittings and fixtures such as tiles, taps, and door handles can add aesthetic style to a room, according to Fix Or Flip Finance. However, if you choose expensive materials for these and spend too much, it will greatly impact your budget without adding any real value to the overall property. Make sure to find nice fixtures and fittings to match your home’s style without adding too much cost to your project.
Hardwood flooring may look luxurious and high-end, but they’re very expensive. According to HR2 Construction, using hardwood floorings to your fix and flip can add to your own costs and raise the price for a would-be buyer. Also, hardwood floors have some distinct disadvantages – they can get easily scratched, especially by pets, and are difficult to maintain.
There is no better way to go over your fix and flip budget than to overspend on countertops. According to HS Property Funds, using granite countertops for your kitchen is a lot more costly than choosing laminate countertops. Laminate countertops look just as classy but are not as expensive. This makes them better for a kitchen fix and flip.
Sometimes it seems easier to just replace everything that looks too old. However, before you totally obliterate a kitchen that has seen better days, DIY Network recommends that you consider stripping and refinishing lackluster surfaces and upgrading fixtures first. For instance, try to refinish cabinets instead of totally replacing them.
The expense of renovating a basement will not improve your after repair value (ARV), according to Joint Ops Properties. It’s best to leave an unfinished basement as is and let the new homeowner decide how to set-up and design the area according to their needs. They can use the basement as a storage space, a family gathering area, a guest room, an office, or a gym – the decision is theirs to make.
According to Walnut Street Finance, fix and flip projects to avoid surround buying a home that’s poorly designed. You need to undergo huge upgrades and renovations for poorly designed houses in order to make them appealing to homebuyers, and this can be very costly and time-consuming without much lift to your bottom line.
While many people work from home, most of them don’t need a complete home office. If you do convert a spare room to an office, Renovation Gurus recommends installing removable furniture rather than built-in cabinets. However, it would be better to just leave the extra space open so the buyer could convert it into a room that suits their needs.
22. Forgetting the 80/20 Rule
Ian Atkins, Head of Finance Vertical, Fit Small Business
The 80/20 rule suggests that 80% of your ROI will be delivered from 20% of your renovations. Some projects are going to deliver the bulk of your returns, while others won’t contribute much. Don’t be distracted by the projects that deliver the least return – you don’t want to invest your limited resources in these low-ROI projects, then find yourself coming up short on the other high-ROI projects.
23. Investing in a Swimming Pool
Evan Tarver, Finance Editor, Fit Small Business
Don’t invest in a swimming pool unless geographically necessary. Swimming pools add little to a home in terms of actual resale value and return on investment. The only caveat is if you live in a place like Arizona where a pool is more of a need to have than a nice-to-have feature.
24. Taking on Projects You Don’t Know How to Do
Allison Bethel, Real Estate Investing Analyst & Writer, Fit Small Business
It’s easy to watch a home flipping show on TV or watch a video on YouTube and think you know what you’re doing, but that’s often not the case. It’s not that easy to tile a floor or lay down carpet yourself. If your work is sloppy it will make the buyer question what else isn’t done correctly in the house and it can negatively affect the sales price. It’s also more expensive to redo the work than get it done right the first time.
25. Designing Based on Your Personal Taste
When deciding on fix and flip projects to avoid, it’s important to consider the general taste of the neighborhood rather than designing the house based on your personal taste. If you choose a particular theme or house style based on your dream home it will limit your potential buyers. It’s best to choose a neutral style or design the house based on the styles of the houses within the neighborhood.
Bottom Line – Fix and Flip Projects to Avoid
The main purpose of doing fix and flip is to earn profit. However, if you choose the wrong projects, it can hurt your bottom line. For this reason, it’s important to listen to the experts’ tips listed above, and make sure you choose the right projects for your fix and flip, which are those that have the highest ROI.