How to Flip a House for Profit DIY While Raising Kids
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How to Flip a House for Profit and Gain Equity DIY-Style

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Chip and Joanna Gaines have made buying and flipping a fixer-upper look so easy! Flipping houses became retirement plans for many when they realized they could cash in on this lucrative side hustle.

After the real estate market tanked in 2008, flipping houses became a very easy way for investors to make money. But now, as the market is rebounding, fewer foreclosures are available. So how can you flip a house for profit when you live in it?

First, I want to explain why you might want to consider flipping your personal home as well as how I did it back in 2007 just before the recession and how I’ll be flipping my own house for profit again next year.

I’ll also explain any tax consequences you may incur as a result of your profits. Disclaimer: I am not a tax advisor nor am I a licensed appraiser.  I’m a Realtor® and am speaking of my personal experience with my own personal property.

How to Flip a House for Profit
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Related Posts to ‘Flip a House for Profit’:

How to Flip a House for Profit Without Losing your Mind and your Money

When considering whether or not to flip a house for profit, you must know that generally, flips are quick. Investors purchase property with the intention of selling it as quickly as possible, often putting ‘lipstick on a pig’.

That’s not what I’m talking about here. I’m talking about selling your personal home that you love with the intention of making thousands of dollars in profit.

My First Experience Flipping Houses

As I mentioned before, back in 2007 I lived in Oklahoma. I bought my very first house with my ex-husband two years after we were married (in 2004). It was a modest 3 bedroom, 1.5 bath, 1251 square feet, all-brick home in a great, established neighborhood with lots of mature trees.

We paid $74,900 for it and financed it with 3% down with an FHA loan. This was before PMI, private mortgage insurance, became astronomically high on FHA loans.

I don’t recommend this type of financing for anyone nowadays. It’s the most expensive home loan type available, and there are far better options.

Our monthly payment was $551.15 per month. I still remember the exact amount. I was proud of my little house, and I had no intention of flipping it for profit.

Then, in a last-ditch effort to try to save our marriage and start over, we decided to relocate to Georgia. The market was booming, and mortgage lenders would give money to just about anybody.

So we put our house on the market and listed it at $75,000. I wasn’t a Realtor® yet. I didn’t consult a Realtor® because I wanted to save money on the listing fees, so I just blindly listed it for what we bought it for.

As soon as I could get a sign in the front yard, a Realtor® reached out to me and offered to help me sell it. She said that she was confident we could get significantly more for the house than the price listed, so I obliged. I quickly learned the true value of a Realtor®.

Tereasa came to my home and did a comparative market analysis after looking at the work we’d done to the home. Our list of repairs included:

  1. new flooring in the 1/2 bath
  2. new paint throughout
  3. repaired fence

That’s it. That’s literally all we did to the property.

We listed the property for $89,900, y’all. I was thinking ‘There’s no way in hell someone’s going to buy this house for that much more knowing we just bought it 3 years prior for $15,000 less.

A few weeks later, we received an offer and negotiated a sales price of $87,000. The house appraised, and after Realtor® fees, we walked away with a hefty $10,000. Talk about a return on investment!

I was so relieved to find that we sold our house when we did because the market tanked, and we’d have been stuck in the armpit of America if we hadn’t sold and moved when we did!

When I lived in Georgia, I decided to leave my banking career for a real estate career, allowing me flexibility and the ability to work from home. When we moved to Illinois, I transferred my license and now work with a virtual brokerage called Real Broker.

I learned a thing or two since my first home purchase and sale, experienced a loss on our second sale, and our third sale, Lord-willing, will provide gains we’ve never seen from flipping.

Related to Real Estate:

How to Know What to Look For When You Flip a House for Profit

  1. Location – When flipping your personal house, think about what potential buyers are going to be looking at. Is the house located near major interstates or highways? Will it require 4×4 access in winter? You’ll need to know these things.
  2. Schools – Even if you aren’t a parent, it’s important to note the school district of the home you’re considering purchasing to flip. Of course, if you already live in the home you’re planning on flipping, this doesn’t apply to you. You can find school information on GreatSchools.org.
  3. Utilities – Who services the home’s utilities? Do they require large deposits? Our local water company in my area is notorious for having bad water (it leaves black sludge in the toilets and gunk in the bottom of glasses) and they require a $300 deposit, only to be returned when you move out of the area. A great place to research areas, utility info, etc is local Facebook groups.
  4. Buy the worst house in the best neighborhood. This is a must! You cannot buy the biggest, nicest home with all of the upgrades because there’s no room for improvement and upgrades. Obviously, when you flip a house for profit, the idea is to fix it up and make money. If all the work is done, you won’t make any money. You’ll end up spending money on unnecessary ‘upgrades’ only to be disappointed because the upgrades didn’t affect the value.
  5. Skip the above-ground pool. They don’t add any value whatsoever and can, in fact, detract from the value of the home.
  6. Speak to a Realtor® about comparable properties and their corresponding values as well as the general state of the economy/market in your area. Keep in mind that things can change quickly, but you can, at least, get an idea of the potential profit.

How We Gained $29,000 in Equity with $7,000 Worth of Renovations

My husband and I moved out of Georgia and up to Illinois (where his family is from), and we bought a ranch-style home that needed some work. We were desperate to get out of my sister-in-law’s house, so we jumped on it.

Here’s what we loved about the house:

  1. It is in an amazing location…located in the country right next door to a historic covered bridge.
  2. The neighbors on either side of us own homes worth $350k-400k (nearly double what we paid for our house). (ie worst house in the best area)
  3. It’s a 4 bedroom, 3 full bath home with 2332 square feet and a full unfinished basement.
  4. It’s on 2 acres of land with a pole barn (1600 square feet, 400 sq ft of which is finished into a ‘man cave’).
  5. There was plenty of work to do to this house. It had some renovations done (a garage converted to a second master bedroom) but the rest of the house needed a few major renovations to bring it up to par.

I’ll eventually share the entire ranch renovation with you, but we paid $204,000 for the home in 2014. It appraised at $211,000 at the time.

For the first three years of homeownership, we painted and replaced floor vents and added new baseboards throughout the house.

The kitchen, hallway, dining room, and another hallway (as well as my kids’ bathroom) all had that particleboard wallpaper glued and nailed to the walls. We also removed all of that and I learned how to mud with joint compound real quick!

 

I subcontracted out the projects we weren’t able to do ourselves. About 1500 square feet of the home was covered in ceramic tile…ugly ceramic tile. So we hired someone to come in and remove all of that.

Related: All You Need to Know About the 1% Rule in Real Estate Investing

Kitchens and Bathrooms Sell Houses

There was also a corner wall in the kitchen that blocked the entire view and made the kitchen darker than it needed to be. Our handyman also removed that wall, ensuring it wasn’t load-bearing.

We installed new laminate (yes…laminate) countertops that look like real marble! I went back and forth on this and decided it was worth it to save some money and skip the marble or granite. We couldn’t be happier with our decision and most people still think it’s the real thing!

If you’re looking to save even more money, you could cover your existing laminate countertops with high-end, luxury laminate. This would probably save you $1,000-$3,000 (versus buying new laminate countertops).

Here’s an image of our kitchen looking into the dining room taken at our first showing. That corner wall was blocking the view and ruining my dreams of an open concept kitchen in a ranch home!

Kitchen Ranch Renovation Before Knocking Out Wall
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We hired a subcontractor who removed that wall and the counter “lip” so that we could have a flat peninsula countertop. 

 

Kitchen Renovation After Flipping House
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One of my real estate clients is a flooring installer, so he installed our new Allen + Roth hand-scraped laminate from Lowe’s and our arabesque backsplash. The laminate flooring was absolutely the best decision we could have made. We have three kids and two dogs, and this floor holds up. It’s durable and beautiful, and our appraiser actually thought it was real hardwood! 


We spent a total of $7,000 on this renovation including labor and materials by subcontracting out some of the work and doing some ourselves.

The house appraised for $240,000! That means we have $29,000 extra equity in the property which means when we sell it next year, we should be walking away with a great profit!

Money-Saving DIY Renovation Tip: If you’re looking for decorative corbels for under your countertops or in doorways, consider decorative bookends like these! We saved a lot of money by thinking outside the box on some of our finishes!

Other Inexpensive DIY Renovation Updates

In addition to the kitchen and dining room renovation, we also made other improvements. We painted the ugly exterior brick for less than $300 in total. 

Painted Exterior Brick Ranch Renovation House Flip
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This was the before of the brick. I told you it was ugly! 

Before painting exterior brick
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I whitewashed the fireplace and gave the entire house a fresh coat of paint. 

I painted the bathroom cabinets.

I stained the back deck. This was the hardest job of all. I started out naively thinking I’d use a paintbrush and roller for all of the slats, but I caved after about 2 hours of brushing and rolling with no end in sight.

I bought this sprayer, and it saved me days of labor on this job. If I had to do it all over again, I’d have started the job with the sprayer.

 

Capital Gains Taxes: What You Need to Know

When you flip a house for profit, you’re making money and typically, anytime you make money, Uncle Sam wants a piece of the pie. There are three factors that determine whether you’ll pay capital gains taxes or not.

  1. If you’re single and you profit $250,000 or less, you’re exempt from capital gains taxes on the sale (provided you meet the criteria below).
  2. If you’re married filing a joint return and your profit is less than $500,000, you’re exempt from capital gains taxes (again, if you meet certain criteria).

How to Know if You’re Exempt from Capital Gains Taxes on your Home

In order to meet eligibility for exemption:

  1. You must have lived in the property as your primary residence for two out of the previous five years prior to sale.
  2. You can’t have sold another property and used it to reduce capital gains during the previous two years before selling your current home.

 

That’s it! That’s how you can flip a house for profit that you’re living in! I think this is a great way to pay off debt as well if you’re handy and can do a lot of the work yourself. People have different reasons for flipping their homes. You can use the proceeds to pay off outstanding debt or use the funds as a down payment for a home to avoid PMI.

Have you ever flipped your primary residence? How did it work out for you? Would you ever do it again?

How to Make Money Flipping Your Home While Raising Kids
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How we Flipped our House and Gained Equity
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Comments

    1. Thank you! Yes, they are so much better than the old school laminate! And I don’t have to worry about sealing it or treating it. 😛

  1. Its not my first time to visit this web site, i am browsing this web site
    dailly and take pleasant information from here everyday.

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