Downsizing and Real Estate

6/23/2022 | By Bob Shannon

Home flipping has become increasingly popular for seniors to boost retirement income by bringing in extra cash. But with such high demand, competition is fierce. Considering these guidelines on successful house flipping for seniors can help. We take you from criteria for choosing your future project home so it will sell quickly and for the right price, to an overview of decisions on raising the value, to basic business decisions, to the final sale.

Guidelines on house flipping for seniors

Choosing a property

The first step in successful house flipping for seniors – or anyone – is to find a property that can be renovated and flipped for profit. Ideally, your property should be structurally sound but could use some aesthetic upgrades and minor renovations. For example, you may want to upgrade electrical systems or flooring. Homes with no structural damage and that need relatively minimal fix-up work can command top dollar in today’s real estate market, and simply updating these homes will likely raise the value significantly and get you the best return on investment when you sell them down the road.

Raising the value

man fastening plywood to floor - photo by Richard Lewis, Dreamstime. These guidelines on house flipping for seniors can help boost retirement incomes in making wise choices and renovations.

Many renovations can vary depending on your style, location, and budget. Some renovations will include a brand new kitchen and bathroom, while others may involve adding an attic or basement conversion to increase the home’s space for entertaining, relaxing, or even another bedroom. If you’re looking for a professional contractor, visit a couple of local companies before settling on one to get an idea of how much time your renovation will take and how much it will cost.

To keep the air in your home cleaner, install a range hood to vent grease, smoke, and aromas from your kitchen. This can be one of several improvements that you make in the kitchen, including new countertops, repainting cabinets, and installing new hardware, and installing new appliances. Homebuyers expect a recently updated kitchen, so renovation work in this area is typically a good value.

Related: Building a retirement inflation hedge

Following the 70% Rule

The 70% rule helps you gauge how much to spend. Spend 70% of the after-resale value minus the renovation costs to remain profitable. For example, if a house has an ARV of $100,000 and its renovation costs are $40,000, that leaves you with $60,000 for your home’s maximum resale value. To ensure you can sell your investment property at that price in today’s market, adjust your purchase price accordingly.

House flipping for seniors: Be financially prepared

Using real estate agents

If you need help selling your home, it’s best to hire a real estate agent. These professionals can help price and market your home in the best way possible, giving it the best chance of being sold quickly. They will also handle any issues during the buying and selling process on your behalf. For example, if there are problems with the home or issues with paperwork, they can take care of these for you, so you don’t need to worry about them.

Managing your business

If you’re planning on flipping houses for retirement income, you’d best operate as a business, because that’s what you are. And unless you intend to do everything yourself, you need to have a plan for managing your payroll. Fortunately, modern software solutions for payroll make things simple. Your software can track time, withhold taxes, and process direct deposits. It even has mobile functionality to help you manage on the go.

It’s also wise to have a business logo ready for letterheads, invoices, and the like. That doesn’t necessarily mean that you have to hire a designer — you can make logos for free with an online tool. Simply pull up a template you like, and then customize the graphics, text, and color scheme to create a unique logo for your house flipping business. Then you can download your creation to save for future use.

Finding success

Many older adults are looking to diversify income streams and increase overall financial worth. Investing in real estate through house flipping for seniors is one way to accomplish this income goal. With careful planning and wise decisions, you can make it a success.

Bob Shannon