If you’re a fix-and-flip investor, you know that the faster you rehab a home, the quicker you’ll see a return on your real estate investment. “While you should never cut corners on matters related to safety or code, there are ways to save time and money during the rehab process to increase your profits,” explains Shawn Miller, CEO of 5 Arch Funding. Whether it’s your choice of materials or which modifications you choose to make, you can save money and move the rehab along faster if you know which improvements show the greatest ROI.
Think carefully. Does that house really need a new roof, or would a patch job do the trick? A new roof could cost approximately $21,000, while adding only $12,000 to the home’s re-sale value, say the editors of Remodeling magazine. If the roof still has life in it, repair the leaks and move on to the next project. “Whether you need repairs or a whole new roof, be sure to select a reputable contractor who is licensed and insured,” reminds Miller.
A pricey fiberglass door may add curb appeal to an investment property, helping to encourage a faster sale. But a new steel door can also be attractive – at one-quarter of the price (or less!). Keep in mind, if that door is not a standard size, you’ll pay more for the replacement. “Be sure to factor that added cost into your bid price,” says Miller. If a house has all custom-sized windows and doors that might need replacing before you can flip it, do the math because it could be enough to make you shut the door to that particular deal.
It’s not just non-standard window sizes that cost more. If you’re replacing an old, broken bow window, consider a bay window, instead. The difference? Bow windows have 5 glass panels, rather than three, and are curved to provide a wider view. They also cost about 2.5 times the price of a bay window. “To really cut costs, you can opt for a picture window, or a combination of picture windows and conventional double hung replacement windows,” suggests Miller, “but it may not be worth the cost savings if the bay window is a selling point or focal point in the home.”
While recessed lights are the latest trend and give a more modern look to even the oldest homes, flush-mount fixtures cost about one-third less for similar wattage because they are less labor intensive (no holes to cut, insulate, or seal). Plus, you’ll need fewer lights for the same effect, according to This Old House.
5. Kitchen Countertops
While buyers in many markets demand granite, others won’t care if the countertops are constructed from laminate that just looks like granite. If you are in an area where it’s “granite-or-bust,” you can still save money with first tier granite, which costs less, advises this HGTV article.
6. Kitchen Appliances
Like granite countertops, stainless steel appliances are virtually expected in every market, and can help keep a fix-and-flip house from sitting on the market for months. But that doesn’t mean you need to go for all top-of-the-line brands, says Miller. “In some areas, prospective homebuyers want only certain brands of appliances, so do your research before undertaking this important aspect of remodeling.”
7. Kitchen Cabinets
If you’ve got the impression the kitchen is a significant room – with plenty of space to spend or save – you’re right. Careful cabinet design, with soft close drawers and ergonomic placement, can add a lot to a kitchen without costing much more. Veneer cabinets look just as nice as solid wood, as long as the sides and shelving are plywood rather than pressboard. And don’t bother splurging on custom details like a lazy Susan, expensive hardware, or a pricey custom backsplash that may not fit the prospective homebuyer’s taste, says Miller..
Don’t Skimp on Workmanship
Saving money on materials makes sense, but use caution when choosing contractors. “Standard industry practice is to get three estimates and choose the one in the middle, after checking references and reading online reviews of the contractor to be sure you’ve selected a reputable firm,” says Miller.
If you’ve been an investor for any length of time, you may have developed good working relationships with choice contractors, who can offer you fair prices and may even help you find additional ways to save money on projects.
When you renovate a fix-and-flip home, think warm, welcoming, and – most importantly – neutral. You want prospective buyers to envision infusing the home with their own style. Says Miller: “As a fix-and-flip investor, your job is providing a quality blank canvas for the new homeowners to design their dreams.”
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