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Flipping houses is a financially helpful pastime that isn’t done that often in Costa Rica. Nonetheless, in some specific areas of Costa Rica, flipping houses may soon become a very profitable business. Although it can be an expensive business to start on, the payoff can be hundreds of thousands of dollars. Or not!
For lack of a formal MLS, and the way houses are bought and sold in Costa Rica, you’ll need to be careful with what you do if you plan to get into the house flipping business.
In the past, I wrote a blog about this client who bought a house in Trejos Montealegre, Escazu. He and his wife thought that flipping was an easy business, and they did all the wrong things. They bought, remodeled, and tried to sell it for more than double the purchase price and went on their face.
These are 4 top tips for beginners who want to get into the business and why planning is vital to success in flipping houses.
1. How Much Project to Take On
The first home you buy to flip is an important choice. If you take on too many projects and try to DIY, you may mess up and have to pay even more for someone else to fix it.
On the other hand, if a home needs a new roof, new flooring, plus a new kitchen and bathrooms, you may not be able to make your money back. Unless you bought it at a really low price and the market in the area is great.
Therefore, for your first one, start with a small project and build your way up.
2. How To Tell If A Price Is A Good Deal?
When buying the property, you want to aim for the lowest prices possible to gain the most income potential. This means seeking out properties with good bones, built sturdily, that just need to be updated to reach the modern age.
If the home was built before 1980, you might hit on electrical and plumbing issues. So keep that in mind.
The cheaper a home is, the more projects it’s likely going to need. Pay attention to the balance between how much money you’ll have to pour into it and how much its original cost is. Although it would be nice if you could guarantee that you’ll make your money back, there’s no way to be sure.
3. Why Cutting Corners Is Never an Option
Although DIYing can save you a lot of money, this is the only place you should allow that to sway your choices. Cutting corners when building a home can ruin your reputation: and can kill how much money you receive in return for your investment.
Before any buyer closes on a home, they’ll have a home inspector come through to ensure that it’s safe. If they see that the electrical is a mess or that the house is missing important pieces, it needs to be safe: you’re going to lose sales you might have otherwise captured.
4. How To Sell for the Most Possible
You may be walking around your newly completed project wondering, ‘what is my home worth?‘ and you’re not alone! Many people aren’t sure how to price properties, especially when a major renovation has undergone a giant change. You can also contact our agent in your area.
If you want to sell for the most possible, you need to take steps to ensure buyers see its value. You can do this by showing a ‘before and after’ photo gallery near the front of the home. From here, ensure the house is well-staged. Unfortunately, you cannot rent furniture here, and there are no staging companies in Costa Rica. So, try to stage as best as you can, this will allow you to draw eyes to whatever you want them to see in the house.
Don’t just renovate the interior of the home! Instead, ensure it has fantastic curb appeal by updating the lawn, driveway, and porch. Even simply taking a power washer to the driveway can take twenty years off it. Flipping houses is a creative and intensive job to take on: with the right amount of focus and attention to detail, you can make a lot of money on it.
At GoDutch Realty, we hold your hand from day one, all the way through closing. So if you want an expert to guide you, contact one of our agents.
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I DO want to remind our readers that we appreciate any referrals you can send us. Also, remember GoDutch Realty when talking about your home in Costa Rica to friends and family. We appreciate it.