Buying real estate can be a risk, especially since the country saw the housing market crash in 2007. This crash was not only detrimental to homeowners who saw a huge decrease in their home value, but also for investors who used real estate as a main source of income. Unfortunately, this resulted in numerous foreclosures, reducing the value of homes even further. Thankfully, the housing market is thriving again, surging home values and piquing the interest of many experienced and new investors. If you are planning to purchase a fixer upper to flip for a profit, understanding the importance of smart decisions and proper planning is key to your success. Using this guide, you can flip a fixer upper without flipping out.
While obvious to hear, earning a higher profit on your flip will require a lower cost when purchasing, so make sure to understand your local market. Paying the lowest amount of money for a property will require a bit of research and patience, so take your time when searching for your first potential property.
Visit auctions that specialize in foreclosed properties, but make sure to have a preapproval from your lender beforehand. This preapproval will be necessary before making an offer. It is also smart to have when determining a budget for updates, so make sure to keep this in mind before making an offer.
Study the sale prices of comparable properties in the area, as well. This will help you understand what you could potentially sell the home for after making necessary repairs and updates. Lastly, make sure to offer a realistic price, since there will be a great deal of competition from other investors.
If you are new to the world of real estate, you may find yourself overwhelmed by all the exciting improvements you can make on your purchase. While many of these updates will increase the value and appeal of a home, they may not give you a worthwhile return on your initial cost. Fortunately, some updates will increase value and appeal while giving you a high ROI, or return on your investment. To be a smart fixer upper, focus on the following updates for your first flip:
- Home Exterior – The exterior of your property may appear in good condition, but enhancing the curb appeal in inexpensive ways will increase the value tremendously. Remove dead landscaping and plant a few colorful flowers around the front yard. Pressure wash the siding, driveway, and walkways, as well, to make the property feel fresh and new. Paint shutters and front doors to make the property feel more inviting.
- Outdoor Living – A large portion of potential buyers will want some sort of outdoor space. Consider installing a simple wood deck off the back of the house or a patio. The addition of a deck or patio will make the property more appealing to buyers, decreasing the total time the property sits on the market.
As a new investor, you may also want to hire professionals to complete the updates on your property. While this may save you some time and energy, it can become costly. To reduce your costs and increase your profit, complete the updates yourself.
Improving the property's curb appeal will only require a few pieces of lawn equipment, work gloves, and a pressure washer. Ask friends and family members to help with the deck or patio installation, as well. Be sure to apply for required permits before completing the addition of an outdoor living space.
With proper planning, real estate can be a great investment. Using these simple tips, you can flip your first property without flipping out. Click here for more information about investing in your local real estate.