So you want to get into the business of buying homes to renovate and sell? This can be a fantastic investment giving you a great way to make yourself a nice income, however only if you do it the smart way. There is a lot of information out there this day and age to help you decide what will work best for you,
Five top tips for buying homes to renovate and sell
Finding the Right House
This is one of the best tips anyone can give, do your homework and research the houses you are looking into. Keep in mind the location is very important. Finding residential properties that need to be fixed up in a not so great neighbourhood will not bring you a lot of profit.
If you make the home too fancy you will lose money as not many homebuyers will want to buy a home in a rundown neighbourhood. Try to find fixer-uppers in a medium type neighbourhood where most the houses are in good shape.
Then remodel the home to go along with the rest of the neighbourhood making some improvements. This will bring you the most bang for your buck.
Buying a fixer-upper in an expensive part of town can end up costing you, as you try to renovate it to fit the neighbourhood, you could lose a lot of money on a venture like that. Buying homes in fancy neighbourhoods may mean you do not have a lot of renovation to do, however then again depending on how well the current owner took care of the home you could have major renovations to do.
Remember most people looking to buy a home want it to be ready to move in to and up to standard. Few people want to do renovations or fix their own homes up. They want it done for them and are willing to pay for a house that has been renovated and upgraded.
There is a long term strategy to renovate residential properties to sell. Flipping a house too quickly can actually make you lose money in the long term, and your goal is to grow your wealth through property investing. Here are two suggestions that will make it more profitable for you in the long run.
The first one is to buy the property right out and live in it for a couple of years while you do the renovations. Once the renovations are done you can sell, this gives the house time to appreciate in value and can bring you larger profits. Plus there are tax credits that can help you out during your time of renovation.
The second suggestion is to buy a residential property, renovate it and then rent it out for a few years and then sell it if you want to, depending on if you want to be a landlord in the long term. The rent gives you cash flow that will help pay for whatever renovations you have done, plus a steady income.
Finding Financing when buying homes to renovate and sell can be a difficult problem as a lot of banks do not like to finance homes for investment purposes. Your credit has to be great, and you need a good plan to get the lenders interested in helping you to finance your investment in residential properties.
One option you have is to take a home equity loan out on your property and use that money to finance buying homes. Once you prove you have a track record of taking home, renovating, selling it and making a profit on it than banks and lenders alike will be more willing to lend you more money.
Of course in this day and age of more people getting into investing and buying homes to renovate and sell, getting financing may be easier than you think depending on your location and what state you live in.
It is a common consensus when buying homes to renovate and sell, that more is not always better, many people who buy homes to renovate end up falling in love with the home and spending way over budget making renovations that will not pay off.
Updating kitchens and bathrooms or adding a bathroom are the top renovations that will pay off. Make sure you check roofs and spouting, as well as checking for mould or leaky basements. These are the types of things that new homeowners think are the most important. Also, furnaces and home cooling are at the top of the list, as well as closet and storage space.
Don’t forget about the outside of the home; remember first appearances are still the most important. A little paint and landscaping can go a long way. Just don’t overdo it, many folks who do renovations do way too much and that can eat into your profit. Do enough to make it look nice however nothing too fancy.
Stick to the Budget!
Here is one of the most important decisions you have when buying homes to renovate and sell, sticking to a budget. Once you start looking for residential properties to buy, you need to plan out your budget for renovations. Your first step should be bringing in inspectors to check out the property, once you know what needs to be done, consider what else you want to do to upgrade and improve the home.
Contact several different contractors to get estimates. Don’t just go with one or two contractors, try at least five different ones so you can compare pricing. If you are a do it yourself then check out material costs at different stores, you may get a discount for buying in bulk.
Keep in mind that almost all renovations run over initial estimates. Be prepared for some delays and projects running over cost. Almost any time you do renovations on residential properties there will be unexpected surprises that can come up, so give yourself some room when figuring out your budget.
If you follow these five tips then your experience at buying homes to renovate and sell should go smoothly for you. Always expect the unexpected as there are always a lot of variables that can add to your experience at renovating and selling properties. There is money to be made in this business if you do your homework and plan ahead.
Research your options, there is a lot of information out there on what works best to make the most profit, and after all, that is what this is all about making money by buying homes, renovating them and selling them.