Planning to remodel or fix and flip a property?
No matter how well the build is executed, any fix and flip can be a stressful process for real estate entrepreneurs- budget management, a host of crew running around and having to make nonstop decisions about designs are only a few of the challenges to face on the road to rehabbing and reselling a property.
This is why fixing and flipping is described as an “active” type of investment, requiring more input and hands-on work from investors. That’s also why the most successful real estate fix and flippers are the ones that can mitigate risks and adapt quickly as challenges arise. Nearly as important as that is having the right construction and support crew to make the project a success all across the board.
Keep reading for more fix and flip advice that could make all the difference in your next project:
Nicer Neighbors
Any fix and flip project involving significant refurbing will be disruptive to neighbors, even if the amount of work done is kept to the minimum. On your next fix and flip project, consider taking the time to notify neighboring homes in advance of any construction that is going to be taking place. Certain homeowner associations or areas may even legally require real estate investors to complete this step before construction can start.
The key to getting neighbors on board (and pacified) is to have detailed plans about the construction project in place, and to answer their questions transparently. Potential questions from neighbors could include how long construction will last, and if any heavy vehicles or equipment will be used. Some flippers even take the time to update neighbors on the progress of the project- a nice touch made simple by the use of instant messaging and social media.
Know Your Market
Real estate flippers can and should customize their property renovations based on their market knowledge. It’s important to only spend money on features that potential homebuyers would want, and which add value to the property. This is where the number crunching comes in- real estate investors should estimate costs including property taxes, insurance, interest and any other costs associated with the fix and flip process. Choosing the right neighborhood will go a long way towards guaranteeing a successful resale.
Knowing your market also extends to researching the average home pricing in the area. To help with this, it could be beneficial to check other home sales in the area to compare, or to sit down with a local real estate agent. Some of the more desirable aspects home buyers seek in a neighborhood are proximity to good schools, amenities, security and more.
Don’t Cut Corners
Some are of the opinion that fix and flip projects save costs by cutting corners: this is not always true, nor is it advisable for real estate flippers today. Potential home buyers will be more interested in properties which have the right features, implemented well, and these are the properties which are successfully resold.
Cutting construction corners or skipping on desirable features could affect both the property’s potential ROI, and the reputation of the investor. Higher-end features in properties which are in the lower price range can also add value and affect the sales price. The walls, flooring and ceilings are also the first things that any potential buyers will see when viewing the property so pay extra attention to these.
Finding a Place
Looking for a property to rehab but unsure where to start? Try looking for a neighborhood or area which is inexpensive but well-located, as these can deliver some of the most successful flips. Flippers should consider if an area has the necessary infrastructure, or is undergoing noteworthy development such as the construction of new schools, shopping centers or other desired amenities. Similarly, investors can keep an eye on rising real estate prices, an influx of homeowners moving into the area, decreased rental properties and older homes- the perfect ingredients for a good fix and flip.
Therefore, doing some research about the future of the neighborhood can work in the investor’s favor. These investors can approach realtors who are familiar with the local market to learn more about recent sales, most desired home features and more.
Finding the right neighborhood, successfully connecting with neighbors and keeping them in the know are only a few of the challenges that fix and flippers face. Cutting corners doesn’t do the real estate investor or potential home buyers any favors, and it is highly recommended to pay particular attention to what these homebuyers will notice first when they enter the property. The most successful flippers are the ones who can mitigate risks and who approach problems with an open mind- it is often these investors that have the investments that perform best.