So you are in the real estate industry to purchase a property and rehabilitate it as a way to yield profits. Most investors know this practice as “flipping.” You will have to play smart by not only opting for the best approach but also avoiding some common mistakes many real estate agents make when flipping properties. This is especially true in needing to make your flip buyable.
With so many distressed houses in the market, many agents are making deals. But it is important to understand that there is no room for errors, and real estate agents need to be careful about not only buying the right type of properties but also remodeling them.
Know that doing expensive finishes is not the key element to make a flip buyable. Although it adds to the aesthetics and curb appeal of the property, it does not allow new buyers to incorporate their personality and exclusivity into it.
No matter how well you transform a dud of a property into a gem or the number of exorbitant renovations you make, it will not benefit you if it does not reflect the personality a buyer wants to see.
That is to say, to generate more traffic or attract buyers; you need to offer what buyers are genuinely looking for. From making known improvements to highlighting cosmetic changes, it is important to remodel your flip in a way that makes a property look REFRESHED, not EXPENSIVE.
The post, in this regard, includes some useful tips to help you remodel or renovate a flip in the right way to make flip buyable. But before we plunge into the details, let’s quickly overview what flipping is.
What is Flipping in Real Estate?
Flipping a property means purchasing a house (commercial or residential) with the intent to sell it quickly and make a profit. Flipping in real estate is a short term buy-and-hold strategy. Selling a house for a price more than you purchased it for does not always translate into profit.
Let’s say you buy a property for $100,000 and invest $50,000 worth of renovations. If you end up selling the property for $140,000 (amount more than it is purchased it for), you end up losing money on your investment, if you count the renovation costs and the additional costs you spent in holding and selling the property.
It is worth mentioning that you make profits on buying the property. If you invest too much into making renovations, it might be difficult for you to find potential buyers and make profits.
How to Make a Flip Buyable?
Find the Right House
For a real estate agent, the journey to make a flip buyable begins with finding the right type of house. Remember that you need to focus on the deals, not on the houses. And good deals are not always an easy-to-hunt.
Experienced agents or investors spend a lot of time when it comes to finding distressed properties. They usually work through a network of agents to help them scout the great deals to invest. In short, it is vital that you look for the properties that are under market value if you want to earn profit in the current market.
Renovate Your Flip in the Right Way
The renovation phase is, without a doubt one of the most important parts of the design process of flipping houses. Once you find the right property, it is time to make renovations but under your budget. And the rule of thumb of remodeling a house to flip is to NEVER go for over-improving.
Make sure you research the same properties in the market and determine the market rates for the house you want to flip. Upon determining the fair market value of the property, you can plan the renovations and repairs to make improvements.
Take a look at the following tips to cut down the cost of renovations and avoid the trap of modern flairs and top of the scale finishes.
- Look For Free Advice and Planning Tools
You do not have to take the services of professional interior designers for drawing up plans for renovating bathrooms and kitchen. There are many home-improvement stores that have designers and staff who can assist you.
When you buy the building materials from their store, they frequently throw in the design consultation without charging you any fee. And who says no to the free service?
- Obtain Discontinued or Overstocked Building Materials
When wandering the aisles at the local building-supply store, always be vigilant to find the hardware you want. Ask storekeepers about discontinued and overstocked materials you can use for the renovations.
Talking to the store managers is a good idea as they want to clear overstocked items from their inventory to make space for new merchandise that is in demand. You can purchase this overstocked merchandise for half of the cost and save money.
- Purchase Builder-Grade Material
When you shop for building material, ask the salesman to guide you about the builder-grade material, which is one of the most affordable options, including low-grade carpeting and cabinets.
If you install and maintain them properly, these materials can be the perfect match for markets. However, if you intend to flip on the ritzy side of the city, you may need to purchase the good material.
Some Additional Renovating Tips to make a Flip Buyable
The renovation rules are not much different from rehabbing your own house to sell. Cutting down remolding costs does not mean that you overlook the areas that make the first impression on the buyers. For instance, pay attention to the exterior of the property, its entryway, master baths, kitchen, and front yard. However, do not impose or overdo your decorating style on the potential buyers by keeping the color of the house neutral. This will enable buyers to add their taste and interior preferences to the house.
Moreover, never overspend on the upgrades that do not add value to the house or appropriate for its neighborhood. Going overboard on the renovations such as putting a hot bathtub of $10,000 in a low rate property is certainly not reasonable. Similarly, if you put a costly generator in a flip that cuts down the space of the closet, it will not make the flip buyable.
While high-tech finishes and modern touch can make any property upgraded, it does not necessarily impress a common buyer. You need to make renovations that bring structural integrity to the property to make long-term investments.