1.Calculate the Real Costs
That house might seem like a margin but before you buy, make sure the margins are high enough so that you can recover all your costs plus make a profit. You’ll need to cover the purchase price of the house, finance charges including your monthly mortgage payment, real estate commission, legal fees, and utility payments. Plan for the renovation to take considerably longer than you think to complete renovations and to sell the house once you put it on the market.
2.Know the Market
A low price doesn’t guarantee that a home is a good deal. Make sure there is enough demand for homes in that neighborhood or street. Find out what homes sell for in the area, what type of features and renovations these homes include, and how long homes usually stay on the market before being sold. Look out for anything that could make it difficult for you to resell the property. A location on a busy street, near railroad tracks, or close to commercial properties, for example, could reduce the potential resell value or the number of potential buyers. Make sure you know what types of buyers would be attracted to a home in that area and what types of homes they would want to purchase.
3.Avoid Dated Components
Even in a historic home, dated fixtures can make the whole building seem old or sad. You can still preserve the feeling of the home’s architecture without it seeming trapped in the past. Adding key modern features can make all the difference. Updated lighting, appliances, and features like dishwashers can make your renovation far more inviting to potential buyers. In places where central air conditioning isn’t common like in the UK ceiling fans can make rooms feel cooler and more comfortable while updated light fixtures keep rooms looking bright and modern.
Bathroom fixtures and cabinet and drawer pulls can define a room. Even though they are small, people (often unconsciously) view older styles, colors, and shapes of these items and get the impression that a room is past its prime. Fixtures like this can be quick and easy to replace while making a dramatic impact on the home’s appeal. You might even be able to avoid replacing expensive cabinets simply by painting them and adding new pulls or knobs.
4. Don’t Make It Too Personal
If you love to improve things and redecorate, the options available when you renovate can be exciting. Keep in mind, however, that the goal of your home flip is to create an updated look that will appeal to buyers. Avoid styles that won’t attract enough buyers. This can be a huge challenge. You don’t want the look of the home to be too bland or boring. On the other hand, anything too odd or unusual could create the risk of reducing the number of people interested in buying the property. You might want to save your most dramatic ideas for work on your own home.
You also need to be realistic and only invest in renovations that will make a considerable difference in your ability to quickly sell the home for a good price. Rather than aiming for the perfect house, pick a renovation strategy that will allow you to maximize profits. Adding another bathroom or expanding the kitchen might be critical for success. A spacious en-suite bathroom for the master bedroom is a requirement in many markets but might not be economical in a starter home market. Meanwhile, spending money on an expensive custom backsplash is only a good investment if it will pay off when it is time to sell.
Is the likely buyer of your home a young family, a family with older kids looking for a larger home, or a small home that will appeal to an individual or couple? Each type of prospective buyer has a different set of expectations and requirements. Be sure you are renovating while keeping in mind the needs of the type of buyer who would be attracted to the location, size, and style of the home you hope to sell.
5.Don’t Cut Corners
Renovating a house is expensive. That can make even someone who started with a generous budget consider opting for less expensive materials as the renovation progresses. This is why it is important to have done market research before you start a renovation project. If the potential buyers for your home expect a certain level of quality, excessive attempts at cost-savings could lead to losing money by being stuck owning a property you can’t sell.
Rather than using low-quality materials or fixtures, look for bargains. Discontinued styles of flooring or tiles could be huge cost savings. Shop around for the best prices since even small savings on a few purchases could add up to significant improvements in your profit margin. Don’t be afraid to check centers that re-sell reclaimed materials or to look for used or discontinued materials. Online specialty suppliers often have much better prices than local big box stores.
6.Expect the Unexpected
Everyone dreams of a quick renovation and sale but that rarely happens. Even for people who are very experienced in real estate and construction, surprises are common. Make sure you have enough money set aside to cover any problems that may arise. If you discover serious issues with the home’s foundation, electricity, plumbing, or roof, your cost to renovate the home might increase dramatically. Asbestos in the home, lead-based paint, or other issues could be expensive to correct while increasing the amount of time it takes to complete renovations. It is better to start with a less ambitious property than to end up running out of money halfway through. Even beginning with a small condo could be a good option for a first flip. The profits from that could be used to move on to larger projects.
7.Remember Curb Appeal
As real estate agents will say, kitchens sell homes. While having a good home interior is the key to a profitable sale, many people will skip any home that doesn’t look attractive from the outside. Make sure you include any necessary exterior improvements in both your budget and timeline. Plan ahead as it may take a while for plants to become established well enough to look good. Repairs to the lawn can take even longer.
8.Pick the Right Time
Real estate markets change with the seasons. The trends will vary by area so it is important to know the best times to sell a home and the worst. Make sure your renovation is timed so that you have enough time to complete the work and get the house on the market when demand will be high. In some regions, both summers and winters are slow (other than possibly right before Christmas). You don’t want your house sitting on the market while you wait for the weather to turn.
Most people think homes look better surrounded by green grass and blooming flowers. That’s another problem if you end up listing the home for sale in the middle of winter. If you plan to renovate through the winter and put the home on the market in early spring, consider if the landscaping will have recovered from the winter by then. You might even want to take exterior pictures early, just so that you aren’t stuck photographing the house with snow on the ground or brown grass.
9.Don’t Get Greedy
Once you’ve put your money, time, and energy into renovating a home, you could become overly attached. Remember that you purchased this house to resell it. Carefully price your home based on the comparable homes with an eye to quickly selling your home and moving onto your next project. You will be tempted to price your home higher to maximize your profits. Realise that your best option is almost always a quick sale. Pricing the home a bit higher could be the difference between a speedy turnaround and having to pay carrying costs for another month or more. The longer homes are on the market, the more difficult they are to sell. People tend to assume those homes haven’t sold because there is a problem with the house or it is overpriced. Once your home has failed to sell quickly, you are likely to have to drop the price, possibly to a far lower price than you would have originally considered. Then you will have to struggle to create new interest in the property.
10.Set the Stage
Make sure your renovation project looks its best when it is time to sell. Some real estate markets are so busy you might be able to get a good price for an empty home. In most places, however, staging the home could be key to sell a home for top dollar. Empty homes look smaller than those who have been outfitted with properly-sized furniture. In addition, having the home staged with furniture and accessories makes it easier for potential buyers to imagine how their furniture and other belongings might fit into space. Inviting home staging will allow you to take interesting and attractive photographs of the home. Good photography has become increasingly important given the reliance of many buyers on online real estate listings. You want to potential buyers to imagine themselves living in the home so avoid staging the home with photographs of people or other images that make it seem like it is someone else’s home. Don’t forget to budget for the staging of the property. If the property stays on the market for a while, you’ll have to either continue to pay for the use of the staging materials or revert back to an empty house. Include that in your pricing considerations.