Bellow are a few real estate tips to help you in your rehab journey!
Have a pulse on the area: Research the area in depth and know exactly where the house Is located in comparison to other homes you are comparing it to. Some neighborhoods spans for miles of similar houses while some neighborhoods change drastically from street to street. Know where the house is located in relation to the comparable houses that you are using and adjust accordingly. Some things to consider: School district, the amount of street traffic, the condition of the neighbor’s houses, the demand in the market for that area, etc.
Any house will sell, but your goal of an investor is to have your house sell in the quickest way. Make sure you are making adjustments based on what this property has vs what you are comparing it to. You can read more about things to consider before making an offer, visit our blog.
Choose a property that needs significant work: You will be faced with a lot of houses that just need cosmetic changes. These properties in theory are great for an investor because you will be in and out in of the project in lightning speed. But houses that are just a few cosmetic upgrades are not investor friendly options for the following reasons:
Typically houses that only need cosmetic upgrades are not priced at a significant discount
The amount you will need to invest + your holding costs and closing costs will eat up your profit
Instead, look for houses that have significant renovation needs – things like mold, significantly outdated electrical and heating, damage to walls and ceiling or really anything that a residential home buyer would not want to take on! And remember, having the right contractor on your team is essential in making your numbers work!
Price your home conservatively. You do not want to renovate the home in hope that it will sell for the most expensive house on the market. Rather, you want to be right in the median price range of all your comparable homes. The point of house flipping is to minimize your holding costs and that means renovating quickly and getting it back on the market!
When you are calculating your scope of work for the renovation before your project begins, make sure you are aware of what the neighbors have. Do not under rehab and more importantly, do not over rehab a home because it most likely will not get you a premium.
Do not underestimate how you price your home and the strategies to sell your house quickly.
If you are a real estate investor, you need to be able to spot a good deal right away but also know when to walk away when the numbers do not make sense. Do your homework, research the area, know your numbers and know who your buyer may be!