- Don’t Over-Renovate
- Establish a Strong First Impression
Only spend on upgrades that add value.
Whether you're selling your home or investing in a flip house, you need to know how to renovate a house for profit. The three key factors in valuing residential real estate are still location, location and location. Although you can’t move your house, the neighborhood will provide key information when figuring out what improvements to add. Look objectively at comparable sold properties in the immediate area and make sure your upgrades are in keeping with the area and will not price you out of the neighborhood.
It is very easy to over improve a property and end up with a product that is beautiful but out of place for its location. While some buyers might spend a small amount more for a more improved property, they will not likely spend a significant amount more if there is nothing in the area selling in that price range.
Remember, not all improvements add value. Such things as home offices, concrete patios, water features, hot tubs and sports courts generally do not add value to a property. Be careful not to spend your money on things that will limit the number of people interested in the property.
Look at listings and sold properties in the area. Which ones are selling the fastest? What improvements do they have in common? Now look at the ones that have sat on the market the longest. What do they have in common? Learn a lesson from both kinds of properties to determine how to maximize your return on home improvements.
Have you ever a watched television real estate show, like "House Hunters" on HGTV or "Million Dollar Listing" on Bravo? The one thing that all these shows have in common is that when they are showing a house, they almost always place emphasis on the potential buyer's first impression when arriving at the property.
It is also clear that no matter what is going on inside a house, a negative first impression upon arrival is hard to come back from. The lesson is to make sure that your property has great curb appeal, so the potential buyer is intrigued and looks forward to seeing what is inside.
First, you need to make sure that the structure itself is as nice as it can be. Power wash the siding, freshly paint all trim work, make sure that window casings are in good condition, etc. Doing easy cosmetic fixes can make a big difference. Some suggestions for things that will give you a big bang for your buck include:
- Dressing up the front door by painting it a contrasting color
- Replacing old exterior hardware like door knobs
- Making the entryway symmetrical
- Installing outdoor lighting
- Planting flowers and plants
- Installing a new mailbox
- Adding or upgrading shutters
Most of these are not very expensive, but they will make a huge difference in attracting the right buyer for the best price.
In the highly competitive residential home sales market, you cannot have a dated kitchen or bathroom and expect to get top dollar for your property. Not only are these improvements the key to getting a good price for your house flip, but they are crucial for getting people interested. They will surely decrease the days a property spends on the market.
According to US News, the average kitchen remodel in the United States runs $16,000 and the average cost of a bathroom makeover is $10,000. These are some of the best renovations for resale as they will make purchasers fall in love with your property and pay for themselves.
While doing your home renovation, house flip, or preparing your home for sale there are ways to do a kitchen right and stay in budget. Finding a good cabinet, counter, and flooring supplier is key to the rest of your project and future projects. If you are on the handier side, getting “RTA” (ready to assemble) cabinets can save money on your kitchen. If you’re not handy or don’t have the time to assemble your own cabinets, find a good supplier that does high volume they will be able to get you a good product for wholesale prices. Many online cabinetry suppliers like www.lakestreethome.com will actually offer free expert kitchen design services and walk you through the entire process. These professionals can help you to avoid unnecessary expense and to keep the appeal broad by knowing what sells the best. They even have professional assemblers and cabinetry installers to help you troubleshoot a tough DIY situation that you may encounter.
With regard to bathrooms, it may be possible that the existing tile can be used, and the fixtures such as toilets and sinks replaced. It is as easy as a click these days and you can get a high-end vanity delivered to your door at wholesale pricing with granite, quartz, or marble top included. Again, www.lakestreethome.com is a great supplier for this. Updating a shower door, or cabinet hardware in the room can also be an easy fix. Like the kitchen, any work done must ensure that the room is safe. Cutting corners in the kitchen or bathroom will surely come back to bite you. Do it right the first time. For 2018, the most appealing cabinet color is a bright white.
Anybody who is renovating houses for a living will tell you that another critical update to any home is your flooring. You can have the hottest new trend in kitchen and bathroom cabinets and fixtures but if you have the 1970’s sheet vinyl on the floor, it will never sell for what you want. In 2018 and beyond, people are using far more hard surface flooring than carpet in their homes. Look into the hot, new styles of Laminate Flooring and WPC flooring (water proof click flooring). The new technology in click together floating floors makes them very simple to install and are eye catching. New flooring can bring an old home into the new age without a significant investment. Put hard surface flooring everywhere and carpet in the bedrooms. The little bit of carpet in the bedrooms give the house that homey feel and will make the home smell like new. There is nothing better for a buyer than walking into a home to see new cabinets, fresh flooring and that smell of new paint and carpet.
Focusing on neutral design elements will appeal to the largest buying audience.
Buyers will very quickly be turned off by a personal taste that does not match their own. Of course, what is bad taste is in the eye of the beholder. Be very careful on imposing what you believe is your extreme good taste on a property.
For example, you may think that bright green granite is a beautiful material for your kitchen counters, but most people will not agree with you. Big ticket or high-impact items, like countertops, bathroom fixtures, flooring and wall finishes should be in colors that appeal to the greatest number of home buyers.
Accordingly, soft, neutral colors should almost always be used. There is room to use bright colors and unusual materials as accents for the purpose of drawing attention to things, but they should be on things like pillows and accessories. They should always be touches, not overwhelming amounts. A tasteful, eye-popping kitchen island front may be the only exception to this.
In 2018, the most appealing colors to use as your neutral canvas are grey and “greige”, which walks the line between grey and beige. Be a bit careful with grey if you intend to leave the old honey-oak trimwork in the home. With grey, you always want white doors and trim.
Look at upgrades from a buyer’s perspective and ask “would I pay more for this property with this upgrade” and “without this upgrade would I choose not to buy this house.” Every upgrade (unrelated to safety and building codes) needs to either get more interest in the house or increase the perceived value of the house.
Someone who is new to renovating and selling houses for profit will frequently get so wrapped up in a project that they stray from their business plan and drastically overspend on a property. When this happens, they are completely shocked when they do not make a profit on their house flip.
It is very easy to lose track of costs by paying too much for necessary upgrades. For example, buying your laminate flooring from the full-service flooring store where you get your carpet may be convenient, but you may pay $4 per foot for the product and $2.50 per foot for installation. The same look can be achieved with laminate for as little as $1.29 per foot from an online source like www.lakestreethome.com and a DIY install or an independent installer who will do it for $2 or less per foot. While you do want that wow factor, you need to be careful about how to achieve it.
Before starting a house flip, make sure you identify where you are going to spend a lot of money and where you are not. While there may be cost overruns, that is what the contingency fund is for. If you end up overspending your rehab budget and contingency fund, you will end up losing money on your house flip.
Contractor expenses must also be closely monitored. While many contractors are honest, not all of them are. Contractors frequently overbuy materials such as sheetrock, plumbing items, tile, etc. and get paid for the materials by the rehabber. The contractor may then return some of the overbought items to the store where purchased and keep the money.
In other cases, a contractor may have a dumpster placed at a rehabber's home but allow others that he is affiliated with to use it. The rehabber is then stuck paying extra for the increased weight. Trust your contractor, but also, keep an eye on the bottom line. Remember - the end goal is to sell, so focus on the best renovations for resale.