Flipping Or Rehabbing- What’s The Difference
Though many people associate flipping exclusively with fix-and-flip homes, there are two main ways to flip a property:
Buy a property in a fast and increasing market, hold it for a few months until the value increases enough to make a profit, and sell it without making any upgrades or repairs.
Buy a distressed property, rehab it, and sell at a profit—the classic fix-and-flip.
The point is that rehabbing and flipping are often used interchangeably, but the two terms are not always one and the same; an investor can “flip” a home without undertaking any major renovations or repairs in the right market. On the other hand, an investor can “rehab” a property and not flip it, adding it instead to their portfolio as a rental unit.
House flipping is a common real estate investment strategy that involves purchasing a property, holding it for a short time, then selling it for a profit. A house flipper will typically hold each property for a few months up to a year. Investors usually buy distressed properties at a discount, rehab them, and sell them at a profit. To get profit, the flipper must pay less than the market value for the property and know the amount it will take to renovate the home. Typically, Investors shouldn’t pay any more than 70% of the properties after repair value (ARV) less the costs of repairs to acquire a property. Investors who specialize in flipping properties can realize sizable profits and their capital is at risk for a much shorter time compared to those who invest in buy-and-hold properties.
Rehabbing is the process of restoring and improving a property. In most cases, rehabbing does not involve substantial alterations to the floor plan but may include major repairs to components such as roofing, electrical, and plumbing systems. Rehabbing generally goes beyond simple superficial repairs. Rehab properties can offer wide profit margins while simultaneously helping investors increase their portfolio and network. These projects can take anywhere from a few weeks to a few months, depending on the amount of work needed.
Most rehabbing projects involve a period of demolition followed by framing and foundation repairs, HVAC, plumbing, and electrical work, and ultimately trimming and painting.
Successfully rehabbing will leave you with a healthy profit making this a very lucrative business.
Call In the Pros
Carolina Renovations is the premier Market-Turn-Ready renovation group of the Carolina’s servicing both North and South Carolina. Our expert team is experienced in both residential and commercial maintenance, repair and Renovation/Rehab needs. Our focus is working with large scale residential rental units (both single family home and multi-unit dwellings) with their turnaround needs and remodel services. There is No job too large or too small for us. Our clients have confidence in our un-compromised services and quality of work. We have developed this confidence through effective and timely project management deadlines, clear communication and exceeding our clients’ expectations. Contact us for an estimate today!