After reading the 10 Important Steps leading up to purchasing the house you’re going to flip, there’s a few things to keep in mind as you are getting started. A lot goes in to a fix and flip; you want to ensure that you put your efforts into the right areas. You will play the roles of a researcher, a real estate agent, a negotiator, a financial clerk, an interior designer, a landscaper, a marketer, and a salesperson. That’s a lot to take on, especially if you are new at it.
Keep it simple by following these 4 basic rules.
1. Don’t Do Too Much.
When you’re looking at the potential of a property, it’s easy to see all the improvements you could make to increase the value of the home. Wood floors, custom cabinetry, and granite countertops would look luxurious and surely increase your after repair value (ARV).
Let’s say your calculations shows that a $120k renovation would bring you an ARV of $325k. Sounds pretty nice right? But what if houses in that neighborhood aren’t selling for more than $275k? You’ve just made some costly decisions and overpriced your house out of the neighborhood.
Don’t get so caught up in what the ARV could be that you lose sight of reality.
2. Don’t Do Too Little.
On the same hand, don’t renovate with cheap materials just to save some money. Potential home buyers will see that and be turned off from the property. What’s the point of saving some money if your renovation looks cheap and you can’t sell the house for the price you want?
3. Keep Your Quality in Line with the Neighborhood.
Find the happy medium between too much and too little. Know the neighborhood and renovate to match it. If the rest of the neighborhood has Formica countertops, don’t be afraid to put in Formica. If the neighborhood has tile flooring, put in tile flooring. You don’t want to have the nicest, most expensive house on the street, but you definitely don’t want to have the cheapest either. Renovate to match the area.
4. Incorporate a Wow Feature.
You are in this business to quickly fix & flip and move on to the next property. You don’t want your property to blend in so much that it may not sell quickly. You want it to have something that makes it stand out from the rest in the area, something memorable about your house. To do this, pick one area to upgrade above and beyond the rest of the neighborhood. It could be upgrading the countertops to granite or quartz, upgrading from vinyl flooring to engineered hardwoods, or creating a custom, master walk-in closet. Pick something that will make the house stand out above the rest and do it well.
The fix and flip business is just that, a business. Don’t allow yourself to get caught up in what you would change if you were going to live there; you’re not. Keep your fixes in line with the neighborhood, with exception of that one extra feature, and never lose sight of your bottom line. Flipping houses can be a lot of fun and extremely profitable. If you’re looking for alternative funding for your next rehab project, Contact Us Today. We’d love to help you get started.
Wright, Ryan C. [April 26, 2018]. 4 Step Guide to Rehab Properties for Maximum Profits. [Blog]. Retrieved from https://www.dohardmoney.com/guide-rehab-properties/