As the Real Estate market continues to heat up throughout our region, inventory of move-in ready homes is very low. For investors considering the purchase and renovation of homes to help meet this demand, profits potentials remain very strong. Here are 5 simple strategies to help ensure a sound investment.
1. Your profit begins on the buy. If you over pay for the property, you have already set a course for failure. Investors who work with a Realtor who is out farming neighborhoods for the best possible buys, significantly expand their profit potential and have an immediate cushion to absorb unexpected events that could arise during a renovation project.
2. Know Your Market. Prices can vary neighborhood by neighborhood and often even street by street depending on location. Working with a Realtor that understands the market in your target area, will maximized your profitability, not only on the buy side of the transaction, but post renovation as well in positioning your property properly in the market for a quick, profitable sale.
3. Define your margins. What are new systems like electrical, plumbing or heating and air going to cost you if they need to be replaced? Do you have a stream identified for supplies such as cabinetry and solid surface counter tops that is dependable, low cost, and delivers a high quality product.
4. Don’t be afraid of edge investment areas. Work with an experienced Realtor who can educate you on what they believe to be the next “hot area”. What if you bought early in that area and rented the property out to a tenant until the area began to see an upswing in renovations, homes sales and demand? This exponentially increases your profitability.
5. Inspection Day’s A Comin’: “Be sure your sins will find you out”. This now famous verse from the Bible is also true when it comes to renovations. Take the time to do it right, pulling all of the proper permits and correcting items as you are working on the renovation. It will cost you far less up front while you have subcontractors staged onsite already. You can be sure that a well trained inspector will be employed by future buyers to make certain everything is as it should be.