Renovation tips for investors looking to flip
Who doesn’t like to earn a quick buck? The renovate and flip strategy is all about just that. It’s the concept of buying a rundown property below market price, jazzing it up to increase its value then reselling it just months later for a fast profit. It’s easy said than done and keep in mind, a flip can flop. However if you’re looking to flip follow this guide for renovation tips and more so you finish sunny side up!
What you should look for in a potential house flip
- Location, location, location
Find a home in a desirable, sort after neighbourhood or city where people want to live. Research and find areas with rising real estate sales, employment growth and good schools nearby. There’s no point in buying a place in a run-down suburb that may fall off the map!
- Structurally sound
You don’t want to purchase a place that’s about to fall to pieces, as that will just cost you a lot more money to renovate from scratch and the probability of making a profit decreases. Look for a property that is in a good condition structurally. It’s always a good idea to bring a builder, plumber or electrician with you to check out the place as they’ll have a good idea as to the state of the home’s structure.
- Close to your home
If you invest in a place that is far away from your home and you have to spend an hour or so commuting back and forth each day than making a quick profit becomes a long shot. You’ll also spend lots of money on petrol when it’s all about making money. So look at investment properties that are relatively close to where you live.
- Don’t buy at or above market value
Aim to buy at below market value, preferably at the low end of the market. If not, you won’t make money! Look to buy a run-down property in a great neighbourhood as opposed to purchasing the best house in a poor neighbourhood.
- A makeover
In order to resell the investment property for a higher price, it must be in need of a good makeover. Before you even purchase the property have a good idea of several ways you can make cosmetic changes to the place to increase its value. As we mentioned above, you don’t want a place that requires mammoth renovation tasks.
Renovation rules for a successful flip
There are three main areas to focus on when renovating with the plan to flip; the kitchen, bathroom and the street appeal. If you can quickly and easily upgrade these you’re on to a winner!
Rule #1 DIY
Aim to do as much DIY as possible. As soon as you start contracting tradies and builders you’ll be forking out a lot of money. Renovations are expensive so concentrate on the smaller tasks you can undertake with your own hands such as painting, gardening, ripping up stained carpet, tearing down pink polka dot wallpaper.
Rule #2 Paint
A fresh coat of paint can go a long way. It’s inexpensive, can refresh a tired, shabby looking place on both the inside and outside and it’s also a job you can do yourself.
Rule #3 New flooring
Shabby floors can be a deal breaker when trying to flip a house. Don’t shy away from spending money and time on the floors. For example, installing timber floating floors over concrete.
Rule #4 Upgrade and replace
There are plenty of cheap ways to update a place and give it an enormous facelift. Look at replacing some outdated fitouts such as; light fittings, shower screen, bathroom vanity, kitchen lino, cupboard and door handles.
Rule #5 Styling
Styling a place is imperative to achieving a fast and premium sale. Declutter, focus on key rooms and style with modern furniture, artwork, appliances and accessories. You can reuse some of these items for each time you’re ready for resell.
Rule #6 Boost curb appeal
One of the most important factors to selling an investment property is making sure it has curb appeal so it looks attractive to potential buyers as they view it from the street. Paint the letterbox, fence and front door, buy a new house number, plant colorful flowers and keep the lawn well-manicured.
At the end of the day, the goal is to get back $2 for $1 you spend on fixing up the place.
Common mistakes that make a house flip flop
1. Not enough funds: It’s expensive to dabble in real estate and if you don’t have enough money to renovate in order to flip than you’re likely to flop. Which defeats the whole purpose of investing in the property in the first place. That’s why it’s important to do up a realistic budget for buying a property and renovating it. The key then is to stick to the budget.
2. Time poor: Not enough time is a common reason why investors fail to make a house flip. It’s basically a full time job and you need to commit to it 100% if not the property will flop. You need to take your time to find the right property, then you need to fix it up and there are plenty of time consuming renovation tasks like painting. Time needs to be invested into the selling phase, from scheduling meetings with real estate agents to potential buyers.
3. Lack of skills: As discussed above, the key to making a profit is undertaking the renovation tasks yourself. If you're handy with a hammer, enjoy laying carpet, roof a house and install a kitchen sink, you've got the skills to flip a house. On the flip side, if you've got to pay a professional to do all of this work, the odds of making a profit on your investment will be dramatically reduced.
4. Lack of knowledge: To successfully flip a house you need to purchase the right property, in the right location at the right price. A lack of knowledge in these areas and you’re likely to make a poor decision in which case the house will flip flop. Familiarise and educate yourself on the property market even if that means attending seminars and conferences. The more knowledge you have the more likely you will become a successful house flipper!