Rehabbing & Flipping: What’s the Difference?

These two terms are often used interchangeably in the investment world. It seems like that they both mean the same thing. However, there is a significant difference. Rehab is not equal to a flip and vice versa. If you’re into real estate investment, you must be familiar with these two words.

What does it mean to flip a property?

Flipping is similar to renovating a property. In dictionary terms, it means refreshing the appearance of the property. In most cases, a property is considered a flip, if you make only cosmetic changes.

What is Home Rehabbing?

It is a more detailed approach, similar to constructing a home from scratch. Take the example of an old property. Let’s say; you bought a house (construction 1976). Now you are planning to rehab the house.

You’ll need to improve the layout. You need to replace the essential systems such as water pipes, plumbing fixtures, electrical panels, and other things that make a house functional. You must improve the property insulation. Check the condition of the roof. Replace it if necessary. Since the home is old, the integrity of the foundation might be questionable. Hire a structural engineer to inspect the foundation. If the inspection reveals problems, you ‘ll need to repair the foundation, which can be an expensive & time-consuming project.

After the house is functional and safe, you’ll focus on cosmetic improvements such as painting, landscaping, carpeting and other projects.

Home Rehabbing Vs. Flipping

Both rehabs and flips are tackled with different goals in mind. Home renovations are minor projects that don’t involve a change in layout. The goal is to renew the appearance by making the necessary repairs and changing the required items. A rehab, on the other hand, is required when the property in question requires significant maintenance and you must pull out the old systems and replace them with new ones.

It doesn’t matter which term you use. However, for most people, their home is their most significant investment. They are investing their money into a lifestyle that will bring the comfort and happiness they desire. Be upfront with your customers. Don’t say; you rehabbed the property if it was a flip. Disclose the condition of the essential systems and tell which fixtures were replaced.

Many times, a flip is confused to be a rehab because a new buyer cannot see beyond the surface.

They’ll see the carpet, paint, and new lights and they’ll think that everything is new which is not true. However, the experienced eye can tell the difference between a renovation and a rehab. The listing agent can guide the buyers about the condition of the property. The inspection process will further elaborate on this concept. Many times, flipping the home is the best option because the house is functional and there is no need to pull the wires and replace them. The condition of the property is good, and the home is just in need of minor repairs. In that case, by all means, put your money in a home renovation project and flip the property.

Having said that, if you feel that a home requires significant repairs, do the job. Get the building permits. Change the boiler. Replace the electrical panel. Waterproof the property. Check issues related to mold and termite. Repair the foundation. Check the condition of the septic tank and make sure that the plumbing system works correctly. By doing this, we can ensure that our customers get only the best.

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