10 Ways to Increase Your Fix and Flip ROI
Fix and flip real estate investment (aka “house flipping”) can be very lucrative if you know what you are doing. Ultimately, your goal is to maximize your return on investment (ROI). From the house you buy to the renovation you plan and execute to the final sales process, you have to make strategic decisions throughout the flip.
Here are PropertyLark’s top 10 tips for increasing your fix and flip ROI:
1. Find the Right House
What makes up the “right house” may depend on your investment plan and budget. Some investors target really run-down properties (sometimes even in bad neighborhoods). They want to buy for less and are willing to spend a little more time and money on the renovation to make it profitable. Meanwhile, other flippers will go after the low-hanging fruit. They may pay more for a house that only need minor repairs and/or is in a good neighborhood, so it’s easy to fix up and sell quickly. The profit margins may not be as much, but it’s a numbers game. The important thing is that you create an investment plan and specific budget. This often helps dictate which houses are best for you to purchase and flip.
2. Add a Fresh Paint Job
A fresh coat of paint will always improve the appearance of a home, both inside and out. Paint or refinish everything from the exterior walls to the kitchen and bathroom cabinets. It will make such a difference!
3. Install New Flooring
Like paint, new flooring will also vastly improve the look and presentation of a home for sale. You don’t have to install expensive hardwood floors, but new carpet or laminate flooring is relatively inexpensive and will almost always increase your ROI.
4. Don’t Neglect the Exterior
Too often, house flippers focus solely on the inside of the house. They don’t spend time on things like the exterior walls, windows, patios/decks or landscaping. Pay special attention to the front entry, driveway and front lawn. Improving the house’s curb appeal will attract more potential buyers. If it looks bad from the outside, you’ll never get anyone to see all that work you did inside!
5. Clean it Thoroughly
Whatever isn’t fixed or replaced should be professionally cleaned. You want the house to be immaculately clean when it comes time to sell. It’s not expensive and will definitely increase your fix and flip ROI.
6. Update the Kitchen and Bathrooms
The most important rooms in any house renovation are the kitchen and the bathrooms. Buyers can use their own imaginations for other rooms, but you want to update/upgrade the kitchen. It is the heart of the house and if it looks dated or dilapidated, you will lose resale value. The same goes for any bathrooms. Put in the time to make these spaces nice and you will see a positive return on your investment.
7. Stage the House
You may also think about hiring a professional home stager to strategically furnish and decorate the house. A staged house will always attract more attention and get better offers than an empty house.
8. Update the Light Fixtures
Another common upgrade you will want to consider is updating the light fixtures. These are often what feels most “dated” in an older house. Add some contemporary style, but don’t get too funky with your fixtures. Keep them nice and elegant, yet functional.
9. Time Your Sale
We all know timing is important in real estate investment. You’ll want to plan out your purchase, renovation and sale based on what you expect from the local market. Too many investors end up losing money because they buy too high and are forced to sell when the market is lower. Even if you have to sit on the finished property a little longer, you’ll want to time your sale when the house will pull the biggest profit. This is a major strategy to increase your fix and flip ROI.
10. Focus on Energy Efficiency
We recently posted a full article on the topic of energy-efficient upgrades for house flips. Click here to read it. Today’s buyers are drawn to energy-efficient and eco-friendly homes. This is a good way to maximize your fix and flip ROI in the 21st Century real estate marketplace.
These are just a few helpful investment planning and renovation tips to optimize your return on investment as a house flipper. For more fix and flip resources, consider joining the PropertyLark home buying network. Fill out the buyer questionnaire on our website to see if you qualify.