If you have the great fortune to purchase a fix-and-flip property at a good price, with a generous margin between what you pay for the property and what the property can sell for after renovations, nothing else can derail the success of your house flip like making the wrong decisions about upgrades.
Before you buy a fix-and-flip property, thoroughly research local comps (recently sold properties that are similar to yours in size, style and square footage) to give you a solid understanding of what local buyers are looking for. This will determine your construction budget for your project, and will significantly affect your ROI when the property sells. Without thoroughly researching comps, you may be tempted to over or under spend on materials and upgrades or make unwise style choices for the renovation of your fix-and-flip property.
Top 5 Upgrades to Maximize Your Fix-and-Flip Property's ROI
- Kitchen and Bathrooms
You cannot have an outdated kitchen or bathroom and expect to get top dollar for your fix-and-flip property. Prepare to spend a significant chunk of your rehab budget upgrading these rooms. if you plan wisely and offer buyers the beauty and function they are looking for, these renovations will pay for themselves when your property hits the market.
Depending on your fix-and-flip property's local comps, and the as-is condition of the rooms themselves, not every kitchen and bathroom will need a complete overhaul. Do you need all new cabinets, or could new paint and updated fixtures get the job done? If comp properties have upgraded counters and appliances in the kitchen, and higher end upgrades in the bathrooms, you should take into account the cost of these upgrades and spend appropriately if you want your fix-and-flip property to compete with other properties in the local market.
- Flooring and Moldings
When potential buyers open the front door and walk into your renovated house, the style, material and condition of the flooring will be one of the first things they will look for. If local comps feature upgraded wood or laminate wood flooring, and your fix-and-flip property is carpeted, you may find your property sitting on the market longer waiting for a buyer who is specifically looking for carpet.
There are many affordable flooring options you can install that will wow buyers without breaking your budget. If you are installing new flooring, be sure to pay attention to the baseboards and moldings as well, as the condition and quality of them will instantly please or repel buyers.
Replacing all of the windows in a house is an expensive undertaking, but if the condition of the existing windows is sub-standard, installing new ones will be a necessity.
The good news is, window replacement projects account for one of the highest ROIs on a remodel, making new windows one of the most efficient uses of your renovation dollars. New windows increase curb appeal, home value and energy efficiency. There may be no other remodeling project that accomplishes so many things at once.
If you allow yourself to be swayed by the latest design trends, you may be tempted to overspend on lighting, so this is an area to pay close attention to. High-priced light fixtures that appeal to eclectic design tastes may not have the affect on buyers you hope for. When it comes to replacing your fix-and-flip property's lighting, stick to classic fixtures and let buyers swap those out for exotic or trendy fixtures after they've purchased the house.
- Curb Appeal
After you have invested so much time and money making the inside of your fix-and-flip property look amazing, it would be tragic if buyers are turned off before they ever step foot inside.
A negative first impression will prevent buyers from imagining themselves coming home every day to your flipped house, so it is critical that your property has great curb appeal, helping potential buyers look forward to seeing what's inside.
Depending on the market and how your fix-and-flip property compares to comps, you may (or may not) need to install new sod and invest in new shrubs and plants. If you don't have the budget for a more drastic yard makeover, making simple cosmetic fixes to the exterior of your property can make a big impact. Some suggestions for things that will give you more bang for your buck:
- If new paint or power washing will not help beautify your fix-and-flip property's aged or damaged exterior, invest in new siding, especially if local comps have been beautified in this way.
- A front door is a focal point for buyers, and it either welcomes them in to see more, or turns them off immediately. If you have it in your budget, a brand new front door can definitely be worth the expense. If you're on a tight budget, spruce up your fix-and-flip property's entry door with new paint in a contrasting color, and install fresh hardware.
- Like a new front entry door, a new garage door can be really impressive to potential buyers. For relatively little money, a garage door upgrade can give your fix-and-flip property the curb appeal it deserves, and historically, the amount you spend on a garage door upgrade improves your property value to an equal degree.
- Lawn and landscaping will make or break your fix-and-flip property's curb appeal. Remove or trim overgrown hedges and power wash, paint or replace cement surfaces like patios and walkways. If its not in the budget to lay down all new sod, landscapers charge about $200 per 500 square feet of lawn to apply a special green paint that makes dead or dormant lawns look much fresher.
Keep Style Choices Neutral
Successful fix-and-flip investors know very well that nothing turns buyers off more than quirky design choices and colors and materials that won't stand the test of time. "Good taste" is in the eye of the beholder, but your profits are at stake, so be very careful about forcing your artistic expression on potential buyers.
Neutral colors and conservative style choices almost always pay off in the end. If you just have to express yourself with bright colors or quirkier design elements, do it during the staging of your fix-and-flip property, not in the renovations. That way, buyers who are attracted to bright colors and quirky designs will see themselves living in your home, but buyers looking for something neutral won't be turned off by permanent elements they don't want to live with.