Fix and flip projects can be very lucrative, providing investors with a great return in a relatively short timeframe. But the process of conducting a successful home flip isn’t as easy as the reality shows make it out to be. Apart from selecting the right property to flip, knowing where to focus your time and money when making renovations is key to maximizing your return. Certain areas will have a much better return on investment than other ones, and it’s important to know the difference. In this piece, we’ll cover the places you will want to spend more on when renovating properties, and some areas you’re better off saving on.
It’s generally accepted that the kitchen and bathroom are going to give you the best return for upgrades. These rooms see lots of traffic and can be considered the heart of every home. A great upgrade to perform in these rooms is a new countertop, and upgraded appliances for the kitchen. For the bathroom, new fixtures and finishes can be a great way to modernize the room. Opt for mid-range upgrades to balance cost with buyer appeal.
You don’t have to spend much to improve the overall look of the home. A new coat of paint is an easy way to refresh the rooms and the exterior of the home in a cost-effective way. You can also choose durable but affordable flooring like laminate, vinyl, or engineered hardwood. Just be sure to stick to neutral color palettes for your updates to help you appeal to the widest range of buyers.
When renovating a home, investors often forget to pay attention to the exterior even though it’s the first thing buyers will see when browsing properties. A good-looking exterior can increase the perceived value of the home helping your receive good offers closer to your asking price. It doesn’t cost much to improve the landscaping of a property, and just maintaining what is already there can go a long way. Additionally, new paint or new siding is a relatively low-cost way to modernize an older property. Paying special attention to the entryway can also have a huge impact on the home’s overall look and feel.
As you go through making updates to the property, it’s important that you don’t overspend on improvements and price out some of your potential buyers. Ideally, you want to have a fairly priced home that fits in with the surrounding area. That’s why it’s important to do market research so you can have a good idea of the resale value you want to target. Skip over luxury items and avoid major structural changes unless they’re absolutely necessary. Instead, make updates that you know will offer the maximum return in property value.
The great thing about improving the energy-efficiency of a home is that these upgrades can instantly boost property value while also becoming a major selling point in your listing. Plus, it’s relatively easy to replace lighting and appliances with their more eco-friendly versions. Taking this one step further, smart thermostats learn the patterns of residents to maximize heating and cooling while reducing monthly costs. Finally, replacing windows and doors can improve the home’s overall insulation performance while also being a nice visual upgrade.
DIYing is a great way to save money on your fix and flip project’s costs, but at the same time it’s important to leave the professional work to the professionals. Small tasks like painting, installing light fixtures, and landscaping are perfect for the thrifty investor looking to earn some sweat equity. More intensive tasks, such as electrical work and plumbing, are better left to the professionals to ensure they meet building codes and more importantly, don’t cause any major damage to the property later down the line.
Time is everything in real estate, and with a fix and flip project it can be what makes or breaks your profitability. The longer you take to offload the property, the more you’ll be paying in holding costs like insurance, utilities, and mortgage interest. In order to ensure a timely transaction, create a detailed project timeline and communicate it clearly with the contractors and developers you’re working with. You should also monitor progress and conduct site visits as often as possible to help you address issues that might cause delays early.
The easiest way to save on your next investment is to obtain financing from a real estate lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are looking to finance a fix and flip project, RCN Capital has competitive loan options available.