Investing in real estate has proven to be one of the best ways to ensure long-term success with your investment efforts. However, just like any other type of investment, you need to research the thing you’re investing in and learn about some of the most common red flags that will help you avoid making costly mistakes.
When flipping a house for a profit, for instance, you want to aim at buying a property that won’t require outrageous amounts of renovation in order to be able to sell it for a profit. That’s why you need to get familiar with all the major risks that can potentially hinder your success. Additionally, when renovating a property, you should know what are some functionality and design elements that are more likely to make the house sell faster. Here, we’ll explore some of the most interesting house upgrades that can make it instantly more appealing to prospective buyers.
Create a budget
Before you decide to invest in any property, you first need to make sure you have enough money to do so. So, when checking out potential properties, make sure that you have a budget that will cover not only the property itself but also any potential renovation and upgrade projects you will need to conduct. Furthermore, leave enough room in your budget for contingency because, more often than not, properties can hold hidden surprises you, unfortunately, uncover only once you’ve started the renovation.
Do some research and know your target audience
Aside from making sure that your budget can handle the flip, you should also do some research and try to define your ideal buyer. Depending on the size and location of the property, you will know which demographics to target for the best possible outcome. Knowing both the market and who your target audience is will aid you significantly in choosing the best possible property. Additionally, if you research the market well – both including the fluctuation of the prices and the general state of the market – it will help you decide how long you can choose to hold the property before flipping it. If the market prices are not quite favorable for flipping once you’ve completed the renovation, you can choose to hold the property and rent it out until the prices go up again.
Cater to their needs
Furthermore, as already mentioned, by knowing who your target audience is, you will have an easier time remodeling the property. Let’s say you’re renovating a property in a good family neighborhood and you plan on trying to sell your property to a family as well, make sure you go for the renovations that make the most sense in that scenario. What that means is that you should ensure that there are no leaky pipes or any other structural problems that can hinder anyone’s health and well-being. Aside from that, avoid painting the interior walls white, as those will be pretty difficult to maintain if the family happens to have small children. Also, make sure you invest in a floor heating system and replace the existing floors with some of the latest flooring products to not only increase the property’s value but also create a cohesive and streamlined living environment.
List everything you’ve fixed
When flipping properties, a lot of people forget about one very important step and that is listing all the upgrades and renovations that they’ve done to it. Doing so will help you get a better picture of exactly how much you’ve invested in the property and it will also be quite useful for future owners. In the list, disclose every system that was replaced – HVAC, electric, plumbing – as well as all the structural upgrades, replaced windows and doors and new appliances. This way, the future owners will have a clear picture of what has been done to the property which will help them determine the areas that might require their attention in the future.
Finally, while the point of the entire project is to return the money you’ve invested and manage to earn some extra as well, you need to avoid going for any over-the-top upgrades that will only inflate the final price of the property. What this means is that – yes, you want to earn a profit but no, you don’t want to hyper-inflate the selling price as that can easily discourage any interested buyers. This is definitely one of the most common mistakes you need to avoid making. Buyers are also familiar with the fact that every neighborhood has certain price points so you need to make sure you stay within those prices.
Flipping a property, no matter how fun can sometimes be a really stressful endeavor. That’s why you need to make sure you do all the necessary research beforehand so that you can increase your chances of making it a success.
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Writer: Tracey Clayton
Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.