Flipping a property can be a lot of work. First, You have to purchase the property at a price point that works with your budget and then you have to put the right amount of work into the project to make it marketable. Many investors become disappointed in their results because they fail to see the end of the process before they start. The goal of each project is to maximize your return. This process begins from the time you take ownership of the property. There are a few of things you can do from the time of acquisition to the sale of the property that will help in this area. To help you sell your investment property for a maximum return I have included the following five tips.
Tip #1 Change the way you think, Think like a Buyer. You need to leave your personal feelings and ideas aside when rehabbing. We all have our own style and certain property characteristic we like. Remember, you are not going to be living in the house, your objective is to make it pleasing to your buyers. To begin this process understand the area and your local market. Research what kinds of properties have sold in the last few months. The listing sheets will have listed stand out features of these properties. Look at homes that have sat on the market for a considerable amount of time and see if there price point is high or if they were over improved or not. With good due diligence you should have a good idea what areas you need to improve and where you can scale back. Thinking like a prospective buyer start from the beginning will help you get the value from the house.
Tip #2 Luxury Vs. Affordability. There is a delicate balance between luxury and affordability during a rehab. All prospective buyers want to live in the nicest house possible. They want granite countertops, updated bathrooms and stainless steel appliances. However, many are not willing to pay a premium for them and if the neighborhood standards are not there, than you are throwing money at a property does not guarantee a return. Over improving your property for the market may turn out to be a waste of money and time. You want to create the highest amount of demand and this often means making the property as affordable as possible. Affordability usually brings in the maximum amount of buyers. Maximum amount of buyers not only increases the chances of a quick sale; but, also creates maximum demand. This demand can result in a bidding war which pushes your final price higher. Luxury items work only in markets where buyers are willing to pay for them. Before throwing money at a properties make sure you understanding the potential return.
TIP #3 The Right Buyers. You need to sell to the right buyer and then even this does not guarantee a maximum return. With any real estate transaction deal, there could be hiccups. Accepting an offer that fails to close can sets you back months. Many times the highest offer may not be the best one. You need to look at the whole process. The contract, prequalification letter and any financials must be reviewed. Despite having everything lined up delays are still possible and probable. Working with a qualified buyer and efficient escrow team can help expedite this process as smoothly as possible. Don’t fall into the trap of accepting a higher offer. A shaky prequalification can cost you up to 45 days before you would find out there is a problem. This loss of time could cost you other better qualified clients that would move on to other prospective properties. Forcing you to start the process all over again. Though, Price is important, working with the right buyer can help you get the best deal.
Tip #4 Market, Market, Market. In certain investing circles there is some debate as to the timing of marketing your project. Logically most of us would think it’s best to wait until the work is done to show off its best qualities. A happy medium is to always market to your network. Taking advantage of this network will generate interest with local attorneys, mortgage brokers, contractors and anyone else associated with the business. Use social media and make posts regarding your property. Speed is of essence. Word of mouth is a great way to find a potential buyer.
Tip #5 Pricing accordingly. This is the most important step in selling for a maximum return. The first thing buyers look at when looking for a property, is price. Listing too high you will cause you to lose a large segment of buyers that may have had interest. Listing too low and you end up leaving money on the table. Don’t negatively impact your property by trying to squeeze 5% more out of it. The fastest way for your home to lose appeal is to sit on the market. Buyers and agents will redirect their search to more affordable houses. If there is no activity with the house after a few weeks, you will be forced to reduce the price. Buyers will look at your property as damaged goods and any offers that come in will be discounted even further. You are better off listing at the right price and hoping to generate demand than trying to get a price that you know isn’t very realistic.
The process of generating maximum return start from the beginning and goes all the way until closing. With these five tips you can gain a better understanding of maximizing your homes’ value.