Why Upstart House Flippers Should Stay Away From Structural Renovations
The basic premise of house flipping seems like a simple enough business model. Buy an inexpensive house that requires renovations, make them, and sell it for more than you invested.
However, it's important to remember that house upgrades and structural repairs are worlds apart. A savvy house flipper would be wise to understand the difference and steer clear of structural renovations whenever possible.
What are Upgrades and Cosmetic Renovations?
Construction professionals take a broad understanding of what constitutes an upgrade or cosmetic renovation. The latter usually refers to items that most DIYers can carry out without a professional. Things such as painting walls, replacing cabinet hardware, grouting bathroom tiles, and other routine changes fall into this category.
A home upgrade usually takes more effort and skill to perform. Removing and replacing kitchen cabinets or reimagining an expansive bathroom generally counts as an upgrade. Many of these renovations require skilled carpenters, electricians, and plumbers among others. They don't just change the complexion of an existing space. Upgrades substantially alter a space's appearance in a positive fashion.
What Is a Structural Renovation?
A structural renovation often involves changing the layout of a home. Construction crews may tear down entire walls. This may include what is known as a "load-bearing" walls which then task the contractor with inserting new support systems throughout the structure. There are times when house flippers might consider structural changes to increase property value in the following ways.
- Install larger window to Increase natural light
- Remove walls to create an open floor plan
- Merge small rooms into a single larger one
While the outcome may seem to fit neatly into the house-flipping model, entrepreneurs may want to consider the potential downside of structural changes.
Why House Flippers Should Avoid Most Structural Changes
One of the under-the-radar issues with structural changes stems from local building codes. In some municipalities, securing a permit to make these renovations requires an engineer to sign off. A structural engineer can charge anywhere between a few hundred dollars to thousands.
Proposed structural changes can also trigger other code requirements. While many existing buildings are considered grandfathered-in with previous codes, structural changes can void that designation. Tear out a couple of structural walls, and house flippers may be looking at upgrading staircases or installing steel girders to support old floors. In almost all cases, structural renovations will be expensive and complicated.
How to Recognize Structural Elements of a House
How do you tell if something is load-bearing or cosmetic? Homes typically have multiple examples. Those that comprise closets or run parallel to floor joists are typically non-bearing or cosmetic walls. Exterior walls almost always carry the load of upper floors and roofs. Interior walls that run the same direction as basement supports are often load-bearing ones. Other items such as foundations and beams also provide structural integrity. When a house flipper pictures a living space in which these are altered, they will also need to invest in a solution.
Structural changes tend to be cost-prohibitive on many fronts. If you are considering a fix-and-flip project, it may be in your best interest to stick with cosmetic updates and non-structural renovations. They make it easier to turn a profit and not trigger unexpected expenses.
About the Author
Kimberly Hering
Kimberly Hering's devotion to helping people achieve their real estate goals stems from her genuine enjoyment of the process. Whatever the task, Kimberly makes it her mission to get it done, however she can, without compromising her client's needs. Often, that means thinking outside the box. After working with Kimberly, clients describe her as being Trustworthy, Creative, Patient, Highly Skilled, Attentive to the Process and having a lot of Integrity.
After spending more than 15 successful years working on Wall Street, Kimberly transitioned into Real Estate, joining Alain Pinel Realtors, then moving to Zephyr, now Corcoran Global Living, in 2018. During her career on Wall Street, Kimberly was a Vice President working as an Institutional Equity Salesperson for Montgomery Securities for 10 years. She covered the top money managers throughout the US and Canada. She joined Jefferies & Co as a Senior Vice President managing the Western Region Institutional Sales group, while continuing to cover the top money managers.
Kimberly leverages her extensive experience selling equities to top money managers throughout the US and Canada, to successfully negotiating any Real Estate transaction seamlessly for her clients. Kimberly is well versed in Marin's neighborhoods, towns, cities, and education system.
Living in the Bay Area for 35 years, 25 years in Marin and having 2 sons in local Marin schools, Kimberly spends a lot of time volunteering in the community and serving on various local Boards. Kimberly has a collection of resources ranging from the best local breakfast spots to vetted contractors. With her reliable list of valuable resources, Real Estate experience and unsurpassed knowledge of Marin's many communities, Kimberly can guide her clients through every aspect of a Real Estate transaction seamlessly.
Relocating to Marin, downsizing, upsizing, first time home buying, final home purchase or sale, or a lot to build a dream home, no matter the undertaking, Kimberly works seamlessly until the job at hand is completed with 100% satisfaction.