Someone must have forgotten to tell America’s wealthy that we’re in the middle of a housing crisis, because in this bear market, luxury properties are selling well. To the upper class, buying a house is like picking up a new set of golf clubs, and that’s good news for house flippers. Although we typically recommend sticking to affordable properties when flipping houses, it might be time to upgrade the merchandise if you’re struggling to pay the bills. But before you go and spend your life savings on that abandoned mansion, there are a few things about flipping luxury properties you need to know.
1) A Wal-Mart faucet has no place in a designer sink. If you plan on flipping luxury properties, be prepared to pull out all the stops. That means investing in high-end appliances, top-shelf paint, boutique lights and the best of everything else. To keep the interior of the home consistent, you might have to add six figures to your renovation budget. It’s going to hurt to spend all that money, but on the bright side, you’ll recoup the costs at closing.
2) To furnish or not to furnish. Don’t be surprised if the previous owners left a set of furniture behind when they moved. Rich people do that sometimes. However, don’t use those leftover dining tables and couches in the home unless you’re willing to fully furnish it. Luxury buyers expect their new houses to be fully furnished or completely empty. If you don’t have the budget to furnish the entire real estate investment, just strip it out and sell what you can at auction.
3) Forget about fixer-uppers. When you’re buying a house for the “one percenters,” you should avoid any properties marked “as is.” Water damage or structural issues aren’t going to fly with the rich, and the repair bills will be so large that you’ll eat up your entire budget just trying to pass inspection. When you find a very expensive home in that sort of condition – even if it’s in a great location – just walk away.
Flipping houses for the rich and famous isn’t easy. Something about putting top-end appliances into a home you’ll never be able to afford for yourself just eats at the soul. But this year, if you’re in a position to give it a shot, flipping these homes can be a worthwhile pursuit. If you can find a way to handle the high overhead and the increased workload, you’ll be able to turn out property after luxury property for a very healthy income this year.
