No matter your budget, there's always an upgrade or two that'll up the resale ante.
Whether your home improvements are for you or potential buyers, consider their impact on your home’s potential resale price before picking up your toolbox (or the phone to call a contractor).
A brand-new kitchen or bathroom will undoubtedly wow potential buyers, but there’s no guarantee you’ll recoup the money you put into those pricey remodels.
To help you navigate the choices that lead to the best return on investment, we asked two industry experts (and one enthusiastic DIYer) to weigh in.
“Renovating the kitchen is always the biggest way to add value to your home,” says Grace Fancher, real estate agent at Kansas City firm Sarah Snodgrass. “People love to cook, and everyone tends to gather in the kitchen. If you add seating, such as an island with barstools, buyers go crazy for that.”
A full remodel is a major investment, but smaller projects make a big difference if you can’t — or don’t want to — go all out. “Nicer appliances really stick out to potential buyers — even if you’re planning to take them with you,” Fancher says.
She also suggests replacing tired finishes with fresh, neutral materials. “You don’t want to be too trendy, but you want it to look up-to-date,” she says. “Everyone loves clean, white subway tiles now, but they’re really a timeless look.”
Replacing dated countertops (quartz is your best bet, according to Fancher) and flooring is also worth the time and money.
The smallest rooms in the house can have a big impact on its value, so Fancher suggests adding a second bathroom or upgrading existing ones so your home features at least two full baths.
Joe Monda, co-owner of Seattle-based general contracting firm Promondo, agrees. “People are spending more on upgrading their houses before listing them,” he says. “They really want to maximize the potential house value.”
But if you’re remodeling a bathroom just to put your house on the market, keep it simple. “Most people don’t want to pay for upgrades, so you want it to be a neutral space that doesn’t look straight out of the big DIY warehouse stores — even if it is,” says Fancher.
She adds that an easy solution is spending a little more on details, like high-quality towel bars and upgraded hardware for those big-box store vanities.
Not in a position to remodel? “Re-grouting tile, or even just using one of those grout paint pens, gives any bathroom a fresher look,” says Sharyn Young, a self-proclaimed DIY addict from Minneapolis.
“The brighter a room feels, the bigger it looks,” says Fancher. “And when you’re selling, you want every space to look as big as possible.”
She recommends replacing flush-mount ceiling lights with recessed and/or pendant lighting — a relatively cheap upgrade that looks modern and makes a huge impact.
“LED lighting has changed everything,” says Young. “There are so many readily available, inexpensive options now that are easy to install. I added Ikea under-cabinet lighting in the kitchen of my last house, and I was amazed at how that one simple upgrade made the space feel larger and cleaner.”
Like lighting, a new coat of paint can also make a space feel cleaner and brighter. Stick to neutral shades, such as light gray and beige, and if you don’t have time or budget to do the whole house, start with the living areas you see when you first walk in.
An even quicker fix is refreshing just the trim. “Beat-up, dirty trim can give buyers a subtle impression that the whole house is dingy,” Fancher says. “Repainting gives a sharper look and shows the buyer that you’ve taken care of the house.”
“A lot of people overlook how important landscaping is, especially when you’re selling in the spring or summer,” says Fancher, adding that you can increase curb appeal by just putting down new, dark-colored mulch, if you don’t want to spend a lot of money on planting.
Monda suggests paying special attention to the entry. Repair or replace any damaged stepping stones, concrete paths, and porch plants, then give the front door a fresh coat of paint and add some potted plants. “You want people to be excited to walk in the door,” he says.
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What if your dream home just happens to have ancient wiring and a cracked foundation?
So you’ve set your sights on a home that, to put it mildly, needs a little repair work. The stairs are creaky, and you’ve noticed a leak (or three).
Still, your mind is made up. What’s a love-struck home buyer to do?
If your heart is set on a fixer-upper, this advice from real estate experts can help you make that “needs-work” house a home.
Check the zoning
“Any municipality has zoning districts, and you need to know what uses are permitted,” says George Vanderploeg, a luxury real estate broker with Douglas Elliman in New York. Knowing the zone is important because it will tell you what you can and cannot do to the home.
For instance, when interiors photographer Josh Gibson decided to renovate his 19th-century cottage in Beaufort, SC, he had to contend with the historic district landmarks commission, which required hours of research and visits downtown. Among the many requirements he had to adhere to were installing single-pane windows and maintaining the home’s unique brick-pier structure.
To research your prospective home’s zoning requirements, you can visit its municipality’s website, or arrange to meet with a staff member, who can walk you through the legalities.
Bring in a home inspector
Once you’ve made a verbal agreement to buy the house and are waiting for the contract to be drawn up, you’ll want to hire a home inspector.
A home inspector will look for structural issues and advise you on things that may or may not need to be replaced, such as plumbing, electricity, and roofing.
Your broker can refer you to an inspector, but it’s important that this person not be biased, as you’ll need an objective opinion. With this in mind, Vanderploeg advises finding someone who will work for you — not for the broker or seller.
Be sure to set aside about an hour or two to walk through the building with the inspector and ask questions. “This allows the buyer to get to know the house really well before they buy it,” Vanderploeg says.
Home buyers tend to ask questions about asbestos and termites, but Hal Einhorn, the principal inspection consultant for Old House Inspection in New York, says it’s equally important to ask about the “general age of certain systems,” as those will indicate when they’re nearing replacement. A 26-year-old boiler, for instance, is likely to go kaput soon, whereas a newly-installed air conditioning unit probably won’t be a problem for the next 20 years.
Depending on the home’s location, you may also want to ask about issues specific to its region, Einhorn says. In New York City, for instance, where the water mains tend to be dated, you’ll want to clarify that the one in your coveted home isn’t made out of lead.
And with today’s families using more electricity than ever, you’ll need to find out if the amount of power coming to the house is suitable, or needs an upgrade. Doing a little research online can be helpful.
Another important topic to bring up is any work you’re preparing to do, like upgrading the bathroom or turning a one-bedroom home into a two-bedroom, Einhorn says.
Find out the agency requirements, and if the home is in a landmarked district, make sure you know the ramifications. Will your project require filing documents, and if so, what is the process?
Hire an architect and/or contractor
Hiring an architect is important because you’ll want their take on what you can do from a design perspective, says Vanderploeg.
The architect will also be able to point out the home’s load-bearing walls, which will determine whether they can be moved around or not, says Scott Oyler, a broker with Coldwell Banker in Cincinnati.
When hiring a contractor, be sure to do your homework so you find someone you can trust. “I’ve heard of horror stories where contractors left in the middle of the job and never came back,” Oyler says — so make sure your crew has good references.
Also be sure to recruit more than one, he adds, as you can never have too many opinions.
Research tax incentives
Depending on where you live, you may eligible for a tax abatement, a tax credit for homeowners who improve their property’s value, Oyler says.
Philadelphia offers one; Cincinnati does, too. Check to see what’s available in your area.
If you decide to buy and improve a fixer-upper, have patience. Once the sawdust clears, you may just find the home of your dreams.
On Point Homevestments
Save some room in your budget for expenses after move-in
By the time you get the keys to your new construction home, you might feel stretched thin in the finance department. From earnest money and design center upgrades, to closing costs and moving expenses, buying a brand-new home is never cheap.
As you take a look at the costs on the horizon, it’s wise to look a little past your closing date. There are a few post-closing costs that are unique to brand-new homes and some that are familiar to all new homeowners.
Set aside a little money for these expenses now, and it’ll be smooth sailing once the “sold” sign is out front.
Unless you’ve negotiated a washer and dryer into the price of the home with your builder, your new laundry room will likely be a big empty space when you move in — no washer and dryer to be found.
Many builders don’t include a refrigerator either, opting instead to let homeowners choose a style that suits their needs.
Here’s a tip to ease your wallet woes: Start shopping appliance sales once you know your approximate close date. Many appliance stores will let you purchase ahead of time to take advantage of a good price, then delay your delivery until you move in.
If you’re upgrading to a larger home, your utilities will likely increase, especially heating and cooling. And if you’re moving to a new city or a location with a different utility company, you may have to pay a deposit to start service.
If you’re interested in services like cable, satellite TV, or Internet, you may have to install some equipment that would already be installed if you were buying a pre-owned home.
Look at all those big, beautiful windows in your new home! And then notice that they’re bare — no blinds or curtains in sight.
Most new homes do not come with window coverings, and they’re definitely something you’ll want to quickly look into when you move in. There are better ways to introduce yourselves to the neighborhood than through wide-open windows — or bed sheets pinned up for privacy.
There’s nothing more exciting than picking up some great new furnishings and decor for a brand-new space. You may have pieces that worked well in your old space but don’t fit your new home’s layout.
Or maybe you have a new guestroom to furnish, a deck that is begging for patio furniture, or beautiful hardwood floors that need area rugs. Set aside some money now so you can start decorating right after move-in day.
Did you know that some builders only landscape the front yard, leaving the backyard unfinished and unfenced? And, if your new neighborhood has a homeowner’s association, the rules may require you to finish your yard within a certain time period.
That means you foot the bill for landscaping your new home’s yard, and whether you do it yourself or hire a professional, it’s still an expense you shouldn’t overlook.
Setting foot in your brand-new, just-finished home is an exhilarating experience, and something you won’t soon forget. With just a little planning and saving in advance, you can spend more time making your new house a home, and less time stressing over how you’re going to pay for it all.
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Thought that all-white kitchen was timeless? Think again.
Home design trends come and go — and this year, one look that’s on its way out could actually cause your home to sell for less.
Here’s a look at five design trends you’ll be seeing more of in 2018, and three it’s time to kiss goodbye (especially if one of your New Year’s resolutions is to sell your home).
Trending in 2018
Interior design experts predict floral prints in bold, contrasting colors will make a big comeback in this year, particularly on large billowing fabrics, like drapery, as well as chairs and throw pillows.
Forget statement walls — this year will be about statement floors. From bold colored geometric tiles to soft herringbone-style hardwoods, expect to see fab floors everywhere, especially in bathrooms and laundry rooms. They’re a great way to make a small room pop, without adding clutter.
Light wood cabinets
Homeowners are gravitating toward medium and light wood cabinets, particularly with flat fronts and clean lines. The warmth, texture and natural element wood cabinets add help make the space feel more inviting.
From warm reds to caramel browns to soft beige, moodier color palettes, both on walls and in artwork, will be popular.
Matte metal hardware
What kind of drawer pulls and light fixtures do you want with those wood cabinets? Matte metal! Homeowners are moving away from shiny silver- or gold-accented kitchen hardware — they can make the space feel cold.
2017 fads to forget
This look has been popular for a while, but it’s on the way out, according to the Home Trend Forecast.
Expect to see more color in kitchens next year, especially if the homeowner is planning to sell. Data shows homes with blue kitchens sell for $1,800 more than homes with white kitchens.
Adding color and texture in the kitchen can help make the space feel more inviting. “While homes with all-white kitchens can be beautiful in photos, they are hard to keep clean and they may sell for less money,” says home design expert Kerrie Kelly.
You’ll see designers and bloggers painting their kitchen islands navy blue or deep red (maybe even purple!) or using white countertops to contrast with medium or light wood cabinets.
While perfectly staged bar carts look beautiful, most people don’t use theirs every day. Instead, the carts take up space and collect dust.
But don’t get rid of your cart just yet! Experts predict a shift toward coffee carts, which can be equally trendy, but far more practical.
Succulents are easy to care for and relatively affordable, but so many other vibrant indoor plant options are out there. Nobody’s saying to toss out your beloved Haworthia, but do consider incorporating other plant varieties into your home — perhaps a palm or hearty fiddle-leaf fig.
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Does your home offer any of the perks some buyers will pay more for?
To understand how much your home is worth, you have to know what affects its value. The Zestimate home value is Zillow’s tool for extrapolating the real market value of your home, based on existing home-related data and actual sales prices in your area.
Thousands of data points correlate with home values and sale prices — some of which are obvious (like the condition of the home) and some that aren’t.
Here are several surprising things that can affect either the existing value of your home or the price someone is willing to pay for it, all based on data.
1. Proximity to a Starbucks
How far do you have to drive to get a Frappuccino? If the answer is “not that far,” you’re in luck.
A 2015 Zillow report found that, between 1997 and 2014, homes within a quarter-mile of a Starbucks increased in value by 96 percent, on average, compared to 65 percent for all U.S. homes, based on a comparison of Zillow Home Value Index data with a database of Starbucks locations.
To evaluate if this effect is isolated to Starbucks, the research team looked at another coffee hot spot (one with particular pull on the East Coast): Dunkin’ Donuts.
The data showed that homes near Dunkin’ Donuts locations appreciated 80 percent, on average, during the same 17-year period — not quite as high as homes near a Starbucks, but still significantly above the 65 percent increase in value for all U.S. homes.
2. Blue kitchens and blue bathrooms
Beyond America’s obsession with curb appeal, what’s inside your house counts a lot too — especially the colors you paint the rooms (particularly the kitchen).
According to Zillow’s 2017 Paint Color Analysis, which examined more than 32,000 photos from sold homes around the country, homes with blue kitchens sold for a $1,809 premium, compared to similar homes with white kitchens.
Blue is also a popular bathroom shade. The same analysis found that homes with pale blue to soft periwinkle-blue bathrooms sold for $5,440 more.
Walls painted in cool neutrals, like blue or gray, can signal that the home is well cared for or has other desirable features.
3. Trendy features
Joanna Gaines’ aesthetic is permeating more than just your YouTube search history. Zillow listings mentioning the shiplap queen’s favorite features — like barn doors and farmhouse sinks — sell faster and for a premium, according to a 2016 Zillow analysis of descriptions of more than 2 million homes sold nationwide.
Listings with “barn door” in the description sold for 13.4 percent more than expected — and 57 days faster than comparable homes without the keyword. Meanwhile, listings touting “farmhouse sink” led to a nearly 8 percent sales premium.
Sellers can use the listing descriptions to highlight trendy details and features that might not be noticeable in the photos.
4. How close you are to a city
If you own a home in a major American metropolitan area, you’re most likely sitting on a significant (and rapidly appreciating) financial asset. Case in point: Home values in the New York, NY, metro area are worth $2.6 trillion, per a recent analysis.
The average urban home is now worth 35 percent more than the average suburban home. Since 2012, the median home value in urban areas has increased by 54 percent, while the median home value in suburban areas is up just 38 percent.
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Today’s greatest real estate investors know it, and it’s about time you did, too: real estate trends, or at least the ability to translate them, can prove invaluable to the advancement of one’s career. Real estate market trends are, after all, the perfect indicator for divulging not only where a market has come from, but also where it has the potential to go. The more investors know about today’s emerging trends in real estate, the more likely they will be to realize success. But, of course, not all trends are created equal; some are inherently more valuable to follow than others. The key is to identify the trends most likely to last and capitalize on the position they may place you in.
Real Estate Market Trends Impacting Buyers & Sellers This Summer
The weather is on the brink of heating up in nearly every real estate market, and that means one thing for those with their finger on the pulse of the national housing sector: things are about to get a lot more interesting. If for nothing else, the summer real estate market represents the busiest time of the year. It is at this time when the whole of the entire housing market gains an incredible amount of momentum from both buyers and sellers. It is worth noting, however, that the summer real estate trends of 2018 look perfectly comfortable mimicking those of the previous years. The trends we have seen up to this point, and even the trends we should expect for the foreseeable future, are to be expected.
To be perfectly clear, there are a number of real estate market trends that are impacting buyers and sellers this summer, not the least of which include:
It shouldn’t surprise buyers or sellers to learn that these trends look like they will carry over into summer. That said, it would be wise to familiarize yourself with them on a more intimate level. The more you can expect to glean from the upcoming summer real estate market, the more likely you are to navigate it with success. Who doesn’t like the sound of that?
If you are interested in giving yourself a competitive edge this summer, you’d be wise to learn as much as you can about what to expect.
Of the real estate market trends most likely to carry a lot of weight in today’s investor landscape, home sales deserved to be talked about first. It is home sales, after all, that serve as one of the most important market indicators for gauging an area’s health, and those that take place over the course of summer are no different. Home sales will take place at a fierce pace this summer. According to Zillow, the average home lasts on the market for 78 days, but don’t get to caught up in that number. If anything, that number will witness a decrease in the coming months, as it does every summer. Case in point: home sells will speed up as the competition heats up. There are simply too many buyers eager to get into a new home, and summer appears to be the time they hope to do so. As an investor, take note of the speed in which buyers are willing to move; it’s one of the real estate trends most likely to be maintained by the state of today’s market.
High Demand And Affordability
Few housing markets across the United States, if any at all, have managed to solve the largest problem facing the real estate landscape: inventory levels, or lack thereof. More specifically, however, supply and demand is currently dictating today’s exponential increase in prices. It is worth noting, however, that demand hasn’t taken a step back. The economy is better off today than it was even a few short years ago, and there are more buyers looking to participate in the housing market, but there’s one problem: there aren’t enough homes to satiate demand. All year, in fact, prospective buyers have wanted to partake in the market, and have been met with opposition around nearly every single corner, and it doesn’t look like this summer will offer a solution. That said, investors should go into summer knowing that they aren’t alone. The next few months will be competitive to say the least, which means success will favor the prepared more than ever. As an investor, factor the competitive nature of today’s market trends into your acquisition strategy. Instead of low-balling sellers, try offering a little more, or even exercising an escalation clause. Real estate price trends suggest inventory levels will only continue to drive up prices, so be prepared for the cost to go up. Doing so could mean the difference between having your offer accepted or ignored.
Hot markets are, for all intents and purposes, a relative classification. Nearly every market in the country is firing on all cylinders at the moment. However, there are markets that are doing better the others. Most notably, the California real estate market appears to be setting an incredible pace. Whether or not that pace is maintainable remains to be seen, but there’s no denying the activity currently taking place in The Golden State. More importantly, the California real estate market has several of the “hottest” markets in the country, not the least of which include:
According to Realtor.com, California accounted for 13 of the top 20 hottest housing markets as recently as the first quarter of this year.
Real Estate Technology Trends
The advent of technology has certainly shifted the way things are done in every industry, and the housing sector is no exception. Real estate technology trends have drastically improved the way people take on what can be, at times, an intimidating industry. Real estate technology serves one purpose: to make our lives easier. It is safe to assume that investors using the right technology are at an advantage over those that, well, aren’t. The key, however, is to adopt the right technology. There are technological advancements that are far superior to others, and it’s in your best interest to use those that will give you the best edge. Here are some of my personal favorite real estate technology trends at the moment, and how they can advance your career:
Commercial Real Estate Trends
Real estate market trends aren’t relegated solely to the single-family landscape; they are also present in the commercial sector. Here are two of the most important trends investors should be keeping an eye on this summer:
Emerging trends in real estate don’t necessarily have to come out of nowhere. The majority of the real estate trends I spoke of here are the result of months, if not years, of anticipation. They are now trends because they appear ready to carry over the momentum they have already generated into summer. It is worth noting, however, that those aware of what’s going on stand a better chance of realizing success, and today’s investors are no exception. If you want to give yourself an advantage over the competition, be sure to listen to what the market is saying; it may be the only thing you need to take your career to another level.
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Teardowns, knockdowns, bash-and-builds vs. McMansions, pop-tops, and snout homes: It’s a war out there these days, as detailed in New York Times article that would get anyone’s heart racing — even if you didn’t own a home.
What’s happening is that folks are buying homes and hoping to tear them down to rebuild bigger ones or take existing homes and morph them into McMansions, of sorts. Communities where this is happening such as Laguna Beach, Calif., Nantucket, Mass., and Ocean City, N.J., are putting their foot down and getting help from the National Trust for Historic Preservation to slow down the madness.
One funny anecdote in the article dealt with a real estate agent who was given the OK to build an addition to his home in Lewes, Del., but to make room, he needed to knock down a dilapidated chicken coop on the property that dated back to the 1800’s. Thinking it would be a slam-dunk to get the go-ahead in a public hearing he was met with fierce public disapproval and did not get the OK. The reason? It lent "value to the streetscape."
So, whenever you drive down the street and see a dilapidated building ready to fall over, a community ordinance could be protecting its right to stand there.
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If there’s one set of real estate rehabbing tips that the would-be fix and flip investor seems to want to know more about, it’s the construction process of house flipping.
That’s because many of the most common, and costliest, mistakes made when rehabbing real estate occur in that all-important construction part of an investing deal.
There are many question to consider for the real estate rehabber: how do you find a contractor?; how do you know what the contractor should do?; and how do you ensure you don’t get exposed legally, and financially, when entering a deal?
In the belief that the best real estate rehabbing tips are those that give you a broader sense of the rehab property big-picture, here’s a quick overview of how the construction process works, from beginning to end.
Understanding The Construction Part of the Real Estate Rehabbing Process
1. Creating a Detailed Scope of Work
The first step of the construction process does not involve contacting a contractor or signing an agreement. It’s completing a detailed and written scope of work.
The Scope of Work (SOW) is the foundation of a rehab project. In essence, the SOW is the rehab investor’s to-do list, an agreement with a contractor regarding the project’s extent and materials used. And learning how to write a scope of work is a vital part of the investor process.
As Paul Esajian explains in his book “The Real Estate Rehab Investing Bible”: “A SOW minimizes miscommunications between parties and holds the contractor accountable to the agreed-upon terms and exactly what you want and need done.”
A detailed and written SOW helps ensure the investor and contractor are on the same page regarding the extent of the project. An SOW also helps ensure the contractor completely knows and understands the agreed-upon deliverables. (Not always the case.)
Developing a good and detailed SOW means checking out a property thoroughly and determining the priority items that need redeveloping. These items may include removing or demolishing certain features, as well as renovating or adding new items that boost the market value of a property.
Once a rough SOW has been established, and meets the projections of a fix and flip investor, the next part is making the SOW as detailed as possible. A detailed SOW should include more than just numbers, but also a bid package that rehab investors send to potential contractors who might be interested in joining a project.
2. Finding a Contractor
Finding a good and trustworthy contractor can make the rehab process easier and less stressful. (Not to mention save you time when it comes to sourcing your next rehab project.)
Some investors, who want to save money, make the mistake of getting an inexperienced or cheap contractor, which in many cases may lead to disaster during the real estate construction process and ultimately dip into a project’s profits. While a more experienced contractor may cost the investor more upfront, chances are, the project will be finished within the deadline set and delivered with quality craftsmanship.
It’s crucial an investor pre-screen a contractor for a project. How do you pre-screen? Here are a couple of key questions to ask would-be contractors:
This may seem like a lot of questions, but better to ask ahead of time –- rather than be burned later on.
3. The Bidding Process (and Choosing a Contractor)
Once a fix and flip investor has identified pre-qualified contractors for the project, they can start the bidding process. The investor’s bid packet should, at the very least, include:
Invite between three to five pre-qualified contractors to provide bids on each project. The investor should inform contractors where to send bids and the specific bidding deadline.
The investor should evaluate the bids based on accuracy, professionalism, as well as overall feel. (It’s okay to trust your gut, just be sure to mix it with a bit of empiric data as well.)
4. Executing the 6 Critical Documents
Before a single nail is hammered, as an investor you must ensure all necessary paperwork is complete. While the contractor will be expected to provide “some” documents such as licensure and liability insurance, the investor must provide six critical documents to safeguard the project and protect all participants.
These documents include:
5. Managing the Rehab
Most of the work on a rehab project leads up to this moment: construction actually beginning. (And you managing the project to ensure goals are met in a timely fashion.)
But don’t worry, you don’t have to know how to turn on a single power tool to manage a rehab project. In fact, the more able you are to set workflow milestones with the contractor, along with a payment schedule and time for building inspections, the less you have to do as an investor during this phase.
A general recommendation is to fix the project’s exterior first, and work from the outside in. (Example: The workflow stages begin with demolition and trash removal and lead all the way to the final cosmetic touches on the property.)
What’s key is that all work match the original SOW. The middle of a rehab project is not the time for improvising or changing “on the fly.” Stick with the plan, and the plan will save you money.
6. Closing the Rehab and Final Payment
You’ve reached the most exciting part of a real estate rehabbing project: staging the project for selling!
The goal in this stage is to make the project appealing to as many prospective buyers as possible. Staging techniques should include a walk-through with the contractor to make sure all deliverables in the final punch list have been addressed and completed.
This is also the stage to schedule final inspections needed to close out the building permits of a project. At this point, you should also be ready to provide the final lien waiver and payment to the contractor. (And take possession of a great-looking property which you can now sell.
Don’t Need to Pick Up a Single Hammer
Construction can be an overwhelming part of the rehab process for the new (ish) rehab investor. It’s important, when scouring for the latest real estate rehabbing tips, to remember your job is not to pick up a single hammer or lay a piece of drywall.
As a rehab investor your job is to have a clear vision of a project: what needs to be done, when and how to keep the project from straying off-course. Don’t worry if you don’t know how every aspect of a build is performed. Your primary task is to stick to your guns, point out anything that doesn’t meet your SOW, and sign off on the deal only when it reaches your expectations.
Do this and you’ll not only feel less stressed, and be more respected, but you’ll increase the likelihood of you realizing a profitable deal.
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There is a lot that goes into completing a successful fix and flip rehab deal. The process is magnified if you are just breaking into the business. You will worry and stress about everything and will often be apprehensive pulling the trigger when a new deal comes your way. Eventually you will find one that checks all the boxes and the real work begins. Instead of focusing on items that don’t do much to your bottom line there are a handful of crucial areas you should focus on. These core items will often determine your profits, and just how smooth the project is. Whether you are an experienced veteran or a first-time flipper here are five crucial areas you need to focus on.
There is always a lot to consider on every new rehab deal. Instead of pulling yourself all over the place focus on these five crucial areas.
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Which rehabbing projects warrant your consideration this spring?
Spring is slated to be one of the most active seasons our housing sector has seen in quite some time. In fact, the majority of those familiar with the real estate sector are expecting this upcoming spring to be busier than its predecessor. If for nothing else, momentum carried over from a particularly hot housing market in 2015 looks to be gaining even more steam. Due, in large part, to impending interest rate hikes, new mortgage rules, an improving economy and several other indicators, there is no reason not to suspect that this spring won’t outpace last year’s.
That said, rehabbers are particularly excited to get their hands on a deal before the season passes them by. I can only assume you share their sentiment as well, or at least you should. However, wanting to capitalize on this spring’s opportunities and actually doing so are two entirely different things.
You must have a plan in place if you are to experience any degree of success on your next rehab project. Not surprisingly, the best place to start is with your bottom line. If you are looking to get the most out of your rehab this spring, I recommend placing an emphasis on ROI (return on investment).
Investopedia defines ROI as “the performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI measures the amount of return on an investment relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment, and the result is expressed as a percentage or a ratio.”
Not all rehabbing projects are created equal. By no means should you ever start a project simply for the sake of doing so; just because you can add another window to a room, doesn’t mean you should. Individual rehabbing projects should never be made for the sake of being made, but rather to increase your return on investment.
Every home improvement project you implement on a rehab is contingent on one thing: your bottom line. As a result, rehabbers are advised to remove any emotional attachment they may have with a property and run the numbers. The numbers on a respective deal, for that matter, will determine which improvements need to be made.
As a rehabber, your priority should be to increase the resale value of a property in the most cost-effective manner. Weigh the cost of a respective project with how much it could potentially return when it comes time to sell.
Let’s take a look at some of the best ROI rehabbing projects investors are going to use this spring:
Spring Rehabbing Projects With Impressive Returns
According to Remodeling’s Cost Vs. Value Report, the following rehab projects should net you some of the highest return on investment:
1. Deck Addition (Wood)
The temperature is rising, and so too are the desires of people wanting to get outside this spring. Homebuyers are, therefore, more inclined to appreciate any amenities that allow them to take advantage of the outdoors. Fortunately, there is one rehabbing project that can satisfy the needs of said homeowners and your own bottom line: a wooden deck addition. According to the report, adding a wooden deck to your rehab should cost an average of $10,471. However, the resale value of a wooden deck addition is approximately $7,850 and recoups roughly 75 percent of the initial cost.
2. Manufactured Stone Veneer
Manufactured stone veneer has become a simple, cost-effective way to pad your bottom line in more ways than one. On the one hand, adding stone veneer to a rehab project costs an average of $7,519 and coincides with a resale value of somewhere in the neighborhood of $6,988. What’s more, the latest Cost Vs. Value reports suggests that manufactured stone veneer can recoup as much as 92.9 percent of its initial cost. If that wasn’t enough, it has the added benefit of increasing curb appeal, which we all know has the potential to increase the price prospective buyers are willing to pay.
3. Entry Door Replacement (Steel)
I am convinced that no rehab is complete without the addition of a new front door. Not unlike the manufactured stone veneer, a carefully chosen front door replacement has the ability to really make a home stand out. In fact, for the amount it costs to replace a steel front door ($1,335), you can really add a significant amount of curb appeal. Not only that, but a front door replacement has become synonymous with one of the best return on investments in the industry: 91.1 percent. At that price, there is no reason any rehab projects you complete this spring shouldn’t come complete with a stylish new front door that begs prospective buyers to come inside.
4. Attic Insulation (Fiberglass)
A surprise entrant on this year’s report, fiberglass insulation claimed the top spot. No other home improvement project was associated with a higher ROI than lining a home’s attic space with fiberglass insulation. With an average cost of $1,268, fiberglass insulation in the attic has a resale vale of $1,482 and recoups as much as 116.9 percent of the initial cost. The addition of insulation on this year’s list, however, speaks volumes of what homebuyers prioritize: “green” improvements. Subsequently, attic insulation has the added benefit of reducing energy consumption during hot summers and cold winters. Rehabbers, for that matter, would be wise to listen to what their demands are saying. Perhaps attic insulation won’t be the only green home improvement on the list for long.
5. Garage Door Replacement
The garage door can say a lot about a property, and rehabbers are starting to take note, or at least they should be. If for nothing else, a quality garage door is entirely capable of boosting curb appeal almost exponentially. However, it doesn’t hurt that they are also associated with some of the highest ROIs on this year’s Cost Vs. Value Report. Accordingly, it costs an average of $1,652 to replace a garage door, but rehabbers can expect to recoup 91.5 percent of the initial cost and add an additional $1,512 to the resale value of a property.
This spring is guaranteed to be a hot one, and rehabbers should take note of which rehabbing projects will net them the most returns. Which rehabbing projects do you expect to implement on your next investment property?
RESIDENTIAL REDEVELOPMENT COMPANY