“Transformation” is generally considered too high-flung a word for the fix-and-flip industry. After all, the key is to maximize your profit without spending more than necessary on a renovation. You want projects that make the house more desirable and a better investment for buyers, but that doesn’t usually involve massive transformations, as those are typically too expensive and can eat away at your margins. However, there are a few relatively cheap ideas that can make a house seem completely transformed, and primary among these is the removal of walls to create more space. A new floor plan can make your property feel like a whole new house, but the upgrade is actually achievable. This can provide a fantastic return on investment for a fix-and-flipper and is a great use of your renovation budget.
The Benefits of an Open Floor Plan
In the house in which I grew up, the kitchen was separated from the dining room by a large wall, which had a little serving window in it. We kids speculated that it must have been built in such a way so that the servants who were cooking could be separated from the rich folks who owned the house. That our one-story house in the suburbs probably wasn’t the previous residence of millionaires with servants didn’t really enter our young minds at the time.
A more likely explanation is that the house was built following plans that were popular at the time, some 70 years before: the kitchen was closed away from where people ate, under the assumption that cooking smells and sounds should be isolated. Because of this, many homes had a fairly oppressive feel, particularly for the person in the kitchen.
Today, open floor plans are much more popular. Most modern homes enjoy rooms that feel connected and flow into one another. There are still defined spaces within the house, but they aren’t closed off from each other. As a seller, you want to appeal to a market that values the light and sense of shared space found in these open floor plans. But if you’re working with an older home, the only way to make this happen is to remove walls. This opens the house up physically, and also opens it up emotionally to a generation of buyers that have grown up with open plans. It’s a great way to appeal to more buyers.
Removing Walls: Weighing the Costs
Surprisingly, the cost of removing walls is relatively inexpensive, rarely going over $10,000 or so. Of course, there are a few things you need to be aware of.
Removing walls in a single-story house, where none of the interior walls are load-bearing, is relatively simple. In a multi-story house, however, you have to make sure that the wall you want to remove is not load-bearing. Oftentimes, you’ll need to call in a structural engineer to advise you on the feasibility of taking down a wall, and what additional work you would need to do to shore up the house if you want to remove a load-bearing wall. It isn’t always possible. In most cities, a permit isn’t required for a single-story house, but it is almost always required for a multi-story house since you are altering the structure. Always check local ordinances before you get started.
It’s also important to consider floors and ceilings. Often, these aren’t uniform from room-to-room, which can pose a problem when melding multiple separate rooms. Having an open plan can make this a jarring contrast, meaning you may have to redo some floors, as well. Obviously, carpet is an easy match, but if you have to add hardwood or tile to maintain the flow from room to room, it can be a little more expensive and time-consuming. Even if the material is the same, it may not line up correctly when the wall is removed, and fixing that could be costly. The same thing can happen with the ceiling.
So when considering whether to not to remove a wall, it is important to look at the ancillary costs and consider whether or not you’ll have to do any further remodeling around the new floor plan. If it starts to look like too much in the way of costs, it may no longer be worth it for your property.
Financing Your Project
If you do decide that it is worth it, getting financing is crucial. A hard money loan that is based on both the equity of your property and the viability of the plan is a great way to get the money needed for this renovation. The great thing about a hard money loan is that it frees up liquidity in order to do these immediate projects. Not having the capital to make the house more viable and worth more can be a frustrating trap – but a hard money loan knocks down those walls.
Socotra Capital takes into account your experience and the nature of the project, not credit history. We understand you may be leveraged to buy the house and we don’t think it’s fair that you can’t improve upon it just because you’re lacking capital. We can get you a hard money loan quickly and easily so you can move forward with your renovations right away.
If you can achieve the look you want within your budget, removing a wall is a great way to boost your return-on-investment. You may have purchased an old-fashioned house with an unpopular floor plan, but with a few moderately easy and inexpensive steps, and with with the help of your equity-based hard money loan from Socotra Capital, you can create a modern, bright, and clean one. Suddenly, it’s like you’re bringing a brand new house to the market. It’s a remarkable – and remarkably easy – transformation.
Your real estate assets are your best investments for the future. At Socotra Capital, we’re proud to be the premier direct hard money lender for California real estate. Contact us today to learn more about how we can help.