You’ve enjoyed success as a real estate investor, but your last fix and flip did not score you the profit you were anticipating. Setbacks can be rough, but do not let that flop get in the way of building your investment portfolio. Here are some tips on how to recalculate the route to your next big-profit deal.
Set a Better Timeline
As a seasoned investor, you know very well that time is money, says 5 Arch CEO Shawn Miller. The longer you take to renovate a house, the more money you spend on contractor and renovation costs. “For your next flip, make sure you have a renovation timeline that works for your bottom line,” he advises. It should be flexible enough so that unforeseen circumstances, such as applying for and waiting for permits, will not delay you from getting the house on the market, he adds.
Do Not Go Overboard With the Reno
If creating a turnkey property is your goal, you can still do that without breaking the bank on your next flip. “There are plenty of ways to save money on a renovation,” says Miller. “It is possible to redo a kitchen on a smaller budget.” For example, you can still use granite countertops in the kitchen, but go with a remnant rather than a full slab.
Make Sure the House Is a Fit for the Neighborhood
When you are looking for your next deal, review those comps closely. Not only are you looking at pricing, you are also looking for home features that are most desirable for that area of town.
“Make sure your house offers what buyers are looking for in that particular neighborhood,” says Miller. “For example, a two-bedroom bungalow with a small yard might not be a good fit for a family-friendly neighborhood, where most houses have at least three or four bedrooms and a pool.”
Continue to Stage Your Properties
Thinking about skipping the home staging step to save money? Here is why you should keep it in your budget: According to The Real Estate Staging Association, staged properties spend 90% less time on the market. That’s because homebuyers need to see how the space can be used in order to see themselves living in it.
“If you are flipping a large home, consider staging just a few key rooms, like the living room and master bedroom,” says Miller. “Then you can let buyers see the rest of the home as a blank canvas.”
Consider Taking on a Partner
If your last project languished because you were tied up with multiple flips, think about teaming up with an investment partner for future projects. Yes, you will be splitting the profits, but if future flips happen faster and more often because of your teamwork, it is worth it.
The most important tip? Don’t be afraid to go for that next deal, says Miller.
“There is a learning curve at every stage of the game when it comes to real estate investing,” he says. “Not every fix and flip is going to be a sure thing. Find out what works and what does not, then apply it to your next deal—and the next.”
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