Fix and flip investing can be an exciting and rewarding business venture for real estate investors. Some will find it’s fun to manage an entire project to produce a desirable property that didn’t exist prior to your purchase.
If you’re looking to flip a fixer-upper house this year, this article will be an incredible resource. Stick around to find out five tips for selling a fixer-upper home for profit without the headache.
Tip #1 – Assess the Property
Assessing the property is the crucial first step in successfully flipping a fixer-upper house. This step involves an assessment of the property’s condition and structure to understand the scope of work needed and any potential issues that may arise during the renovation process.
First, you’ll need a detailed property inspection to look at the interior and exterior of the home. Make sure you pay attention to structural components, electrical systems, plumbing, roofing, and other critical areas of the property.
Tip #2 – Create a Budget
Creating a budget is the best way to stay on track financially and maximize the profit potential with your fixer-upper.
To create an effective budget, start by compiling all the information you’ve gathered during the property assessment. List all the repairs, renovations, and improvements needed for the property and keep this information in a spreadsheet or notebook.
Next, you’ll want to research current market prices for materials and labor in your area and get quotes from multiple suppliers for an accurate cost estimate. Some house flippers overestimate their costs to account for unforeseen issues or hiccups during the renovation process.
Now it’s time to calculate your profit margins. Most investors aim for 15 to 20 percent return on investment (ROI) for their fix and flip projects. To find your profit margins, subtract your total budget from the expected resale value of the property to make sure your profit margin meets your goals.
Tip #3 – Plan and Prioritize Renovations
Planning and prioritizing renovations for a fix and flip property is an important process that can impact your project’s success and profitability. Here are some steps to do it effectively:
- Set Clear Goals: Determine your primary objectives for the property. Are you aiming for a quick sale, maximum profit, or a balance between the two?
- Categorize Renovations: Group the renovation tasks into categories, such as essential repairs, cosmetic updates, and optional upgrades.
- Prioritize by Urgency and Impact: Start by addressing the essential repairs first, as they have the highest priority for safety and marketability before moving to the later stages of the renovation.
- Create a Renovation Timeline: Develop a detailed timeline for each renovation task by considering the estimated start and completion dates for each project.
Tip #4 – Investing in Quality Materials and Contractors
Successful house flippers know that the quality of materials is important when it comes to fixer-uppers. It’s important to avoid cutting corners while still purchasing materials that are budget-friendly.
Working with skilled contractors who recommend cost-effective materials can be helpful to minimize your materials expense. Additionally, home improvement and hardware store associates may be able to help with selecting materials for your project that won’t significantly impact your profit margins.
Tip #5 – Market Your Fixer-Upper
As your fixer-upper project continues to move along, it’s time to start thinking about the marketing plan to sell the home once it’s completed.
This is where working with a qualified real estate agent is beneficial. They will be able to use their own network and marketing resources to get the word out about your property so it sells quickly and for a high sale price.
Are you ready to get the home buying process started? The Kim Holland Homes team is the #1 real estate team on Long Island. Contact us or call Kim today at 516-236-6303 to start the process of finding your dream home.