10 Ideas to Consider for Your Next Investment Property Flip
As a seasoned flipper, you may have found success flipping homes. However, when working on a project, it is imperative that you know which upgrades are going to yield the greatest return on your investment. Otherwise, costs can spiral out of control, putting your once-profitable project at risk. In this article, we will outline which projects and decisions you should factor into your budget when planning your next flip. This is especially important if you are working with a limited budget and can only focus on a few key areas. Here are 10 ideas to consider for your next investment property flip:
- Take a strong look at curb appeal for high ROI.
When rehabbing a residential property, one key focus should be on overall curb appeal. The finished product should stand out and command attention. This means cleaning the yards, trimming the trees and bushes, getting rid of any dead branches and so on. If there is excessive foliage around the yard, it should be removed or trimmed back to open up the yard and allow more sunlight into the house. Investors know the property will sell at a higher price if the yard isn’t overrun by foliage.
If the property has an existing fence, make sure it is in good condition and that there are no missing boards or cracked posts. Once the fence is fixed, paint it a neutral color such as white or tan. This will contrast nicely with any green plants or trees placed in front of the fence.
- First impressions of the exterior are important to the buyer.
Painting the exterior of the house is a great way to improve curb appeal. Opt for neutral colors, such as an earth tone with a white trim. The key is making the house as neutral as possible. When you opt for tan and other earth tones, you give the buyer the opportunity to add in their own decorative touches. You don’t want to go with a bold blue or bright yellow and turn buyers away simply because they didn’t like the color of the house. Buyers don’t want to have to buy the home knowing they will immediately have a list of projects to complete and money to spend before they even own it. This is why it is so important to go with a color that is aesthetically appealing to the majority of buyers.
In the event the property has a garage or other outdoor structure, you will also want to paint it to match the main house. Redoing the paint will help to further enhance the overall property and make everything more uniform in appearance.
- Roofs can be expensive. Find out if you should replace or fix the roof.
Take a good look at the roof. If it still has some life in it, you can simply repair or replace anything that might be damaged or missing. Older roofs that are worn and dilapidated should be replaced. Always tear the old layer or shingles off and replace with new ones. Don’t ever put another layer on top of the existing layer. Also, double-check the roof underlay to make sure it is nice and solid. The last thing you want is for the roof to cave in because it wasn’t sturdy enough to support the weight of the roof. Everything should be in top shape when it comes to the roof. After all, the roof is the main thing keeping the elements outside and preventing them from coming in.
- Doors and windows can easily reduce your ROI.
Do a thorough inspection of all doors and windows before buying the property if possible. These are expensive items to replace, and can take a big bite into your budget. Make sure all of the windows open outward and can be used. If the windows aren’t working properly or there are large gaps around the window frame, repair or replace them. Everything should be sealed securely to prevent any major drafts from coming into the house. Make sure all windows adhere to proper building codes and egress standards to help maximize space in the house. Not only does this look better, but it also helps save the new owner money on their energy bills, which can be a huge selling point to your buyer.
If the windows don’t have screens already in them, you will want to have them installed as well. You want the new owner to be able to enjoy opening their windows and letting the cool breeze flow in, without allowing bugs access inside in the house. The same applies to the doors on the house. All external doors should have screens on them as well and be in good working order, albeit not always aesthetically appealing. If the door is worn, replace it with a sturdier one that fits securely in the frame. Opt for a standard white door to be consistent throughout the property. Any interior doors should have working hardware. The exterior doors should all have deadbolts and be keyed alike to minimize the number of keys needed for the house.
- Choose the right flooring for the right room.
Flooring in areas such as the kitchen, mud room, bathroom, dining room and laundry room should all be ceramic tile. You don’t want carpeting in areas that are prone to water. Leaving carpeting in these areas could end up creating mold underneath the carpeting because it makes it harder to dry out. You want to make the area as easy to clean as possible in the event of a leak or something rupturing. Ceramic tile not only looks amazing, but it will be a selling point for the new homeowner as it is easy to clean and maintain, making it the ideal choice for any wet areas.
In areas such as bedrooms or living rooms, you can go with carpet. However, you need to make sure that the carpeting you choose is FHA quality at a bare minimum. This is extremely important as you never know who the new buyer is going to be, so you don’t want to disqualify someone simply because the carpeting wasn’t up to code for their financing.
- Leave some budget allowance for potential electrical work.
Many older rehab projects will need to have the electrical brought up to code. It should be upgraded to be able to handle the load. This is especially important when it comes to the hot water heater. Change out the wiring for the meter box, hardwire the smoke detectors and so on. You want to make sure that the new owners can plug in anything they need without causing the fuses to blow or shorting something out.
- Make the most out of usable space.
Much of the value in your deal comes from making the most out of the space they have. If you have available space in a property with limited bathrooms and/or bedrooms, considering adding one or both to the house. A three-bedroom house with two bathrooms will draw in a lot more attention than a two-bedroom house with only one bathroom. Making the most out of every square foot of the house is crucial, if it works with the floor plan.
Make sure to create space for the laundry facility if one doesn’t exist. This will add value to the property. New homeowners generally don’t want to have to go to the laundromat every time they need to do their laundry. If there isn’t an existing laundry area, figure out where one can be installed.
- Heating, cooling, and plumbing have high costs and take time to complete. Be prepared.
Inspect the HVAC system before you purchase the property if possible, as most homeowners will want a well-functioning central HVAC system. The condenser should be caged and the air handler placed inside of the attic, if at all possible. Plumbing systems should be thoroughly inspected and updated, if needed. If the bathroom doesn’t have a window in it, a Johnny fan needs to be installed to help reduce moisture in the environment. Have a self-venting hood fan installed above the stove.
- Avoiding pest control can cause thousands of dollars in extra damage.
Make sure to have a thorough pest inspection done on the property. Depending on what the pest control professional finds, you will need to get the problem taken care of right away to prevent it from becoming worse. You don’t want someone moving in to the house only to end up being overrun by bats or mice. Having a professional go through everything and determine what needs to be done will save you a lot of hassles and headaches down the line.
- The devil is in the details. Put finishing touches on the home.
One of the things that you have to bear in mind when rehabbing a property are all of the little finishing touches that less experienced flippers might overlook. Make sure the property has a mailbox. You don’t want the new owner having to install one upon moving in or trying to figure out where to put it in the first place.
The house should have visible house numbers. This is crucial for anyone trying to find the property to even look at it to begin with and for making the new owner’s life simpler after they move in. You don’t want them to lose out on an important delivery just because the carrier couldn’t find their address. The little things that people often overlook can sometimes be the most important.
By going through the checklist above, you can make sure that the property being rehabbed has everything it needs to draw the most attention to it and the new owner gets everything they need in a property. Investing in rehabbed properties gives you the opportunity to earn a profit and turn an older home that someone else might have abandoned into a beautiful gem that someone else can come in and love for years to come.
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