Choosing the right renovation strategies can make a significant difference in the profitability of your real estate investments. Your renovation budget should allow some wiggle room to ensure that you can take care of any issues that are identified during the process. Here are some of the most important elements to consider when making budgeting plans for your next fix-and-flip project.
Upgrade Bathrooms and Kitchens First
Prioritizing the repairs and renovations for your real estate investments can be a challenging task. Most experts recommend making kitchen and bath updates your top priorities. These remodeling tasks are the most likely to increase the value of the property and allow you to recoup your investment with interest. Adding a frameless shower enclosure, new countertops, fresh fixtures or other updates to your property can boost its appeal to buyers and help you achieve greater profitability.
Plan for the Unexpected
Depending on the condition of the property you are renovating, most experts recommend allowing for 10 to 20 percent overage on your basic budget for unexpected repair expenses. This can help you deal with damage and cosmetic repairs that may not have been obvious during your initial inspection. By creating a financial buffer to absorb these added expenses, you can create a renovation budget that offers the flexibility necessary to complete your project in a timely way.
Choose the Right Financial Arrangements
Renovating and reselling properties can be a profitable investment. In some cases, however, fix-and-flip arrangements may be harder to finance than other types of real estate acquisitions. Working with an alternative lender can provide you with added funding options for your renovations and can help you deal with the financial aspects of your project more effectively.
Remember Carrying Expenses
Property insurance, mortgage payments, utility bills and tax bills will continue to make demands on your available funds from the moment you purchase the property until renovations are complete and you have sold it to a new owner. Factoring these expenses into your overall project budget can allow you to enjoy greater peace of mind when dealing with renovations on properties bought for eventual resale.
Enlist Professional Help
Before making a comprehensive budgeting plan for your fix-and-flip project, it is generally a good idea to consult with a trusted general contractor to evaluate the condition of the property and offer guidance and recommendations on any necessary repairs. These construction experts can provide you with the benefit of their experience and knowledge to help you make the most practical choices before and after you purchase an investment property.
Invest in Landscaping and Fresh Paint
Some of the least expensive upgrades to a property can make the biggest impression on potential buyers. A fresh coat of paint in a neutral shade or a planting of bright flowers can help you sell your properties more quickly and for a higher price, which can boost your profits to a considerable degree.
Taking the time to create a comprehensive renovation budget can help you to achieve higher levels of profitability for your fix-and-flip projects. These strategies can help you maximize the return on your investment while ensuring that you have plenty of cash on hand to manage expenses throughout your planned real estate renovations.