The “lipstick on a pig” model is all but dead. Gone are the days of investors purchasing a house, putting in new carpet and paint and waiting a short period of time for the price to appreciate. For a house flipper, competition is increasing, and you need to make sure your project stands out on the block.
More and more, investors need to put meaningful construction and updates into their rehabs. Providing this value-add means that your construction budgets will increase, but it can often result in shorter time on market and greater profits.
Here are four areas of focus for your next rehab to help ensure your final product stands out from the crowd and attracts a motivated buyer.
Focus No. 1: The Kitchen
How you approach this part of your rehab plays a huge role in the marketing time and final sales price for your project. Matching, stainless steel appliances throughout the kitchen are now considered the bare minimum for many homebuyers.
Be mindful of space and flow when you conduct your construction in this area of the home. If space permits, consider adding an island and seating area to the room.
Beyond these bigger-ticket construction items, small touches go a long way to impressing potential buyers during an open house. If the cabinets are in relatively good shape, update and replace knobs, apply a fresh coat of paint or stain and add molding on top. Adding a backsplash above the sink as well as updating faucets are all simple improvements that can leave a true, lasting impression.
When a potential buyer enters your rehabbed kitchen that person should be thinking of throwing a housewarming party, not immediately making a list of improvements that need to be completed.
Focus No. 2: The Bathrooms
First things first, do you have enough bathrooms in the house? This can be a big sticking point for a potential buyer. A good rule of thumb is to have a bathroom for every room in the home.
Of course, not all projects have the space to accommodate a full bath for each room, but half-baths are a great compromise. Extra closet or storage space can often be converted into a half-bath.
Next, ensure the home has a true master bathroom by installing a his-and-her sink and an updated vanity. Eliminating anything outdated in this room is key, so spruce up the bath and ensure the floors are modern and in great shape.
Remember, both the kitchen and bathrooms will receive additional focus from the prospective homebuyer. Always aim to impress in these rooms.
Focus No. 3: Staging
This can often be a point of contention, depending on your investing philosophy. Some find this step is not worth their time, while others never show a house without it. I tend to agree with the latter.
You want the homebuyer at the showing to instantly feel like your rehab is a home when they step through the door. A big, empty house takes a lot of concentration and imagination on the part of the buyer. Having a staging service in your real estate team can be a great resource for an investor. Some of the more experienced investors I’ve come across take a different approach to their staging.
Over the years they have accumulated an entire house worth of furniture and use this collection to conduct their own home staging. This is especially useful when your flips (and showings) begin to increase as your business takes off.
Focus No. 4: Curb Appeal
Always remember the saying, “You never get a second chance to make a first impression.” This is especially true in real estate.
Investors do not have the benefit of starting an extensive landscaping plan now and waiting for the fruit of their labor to blossom in five years’ time. That means working within the time constraints and resources you have available.
Before clearing everything out and starting new, see what work can be done with the landscaping already in place. Sprucing up the existing plants and fresh coats of paint on exterior features can go a long way toward saving time and money while still delivering an impressive final product.
Don’t forget to update or replace the mailbox and give extra attention to the front door. It’s the last thing the homebuyer sees before stepping into the house for the very first time.
Finally, make sure landscaping is kept up while the house is being marketed. No one wants to see an overgrown front lawn during a drive-by.
As the housing market continues to evolve, home flippers are finding ways to keep up, and they continue to purchase and rehab great real estate projects. The investor’s vision for a project is key to starting right and ending well. But the attention to detail and employing those small touches is what helps investors decrease their days on market and increase their profit.
To stand out as a quality rehab and desirable home, your property does not necessarily need the flashiest incentives and all luxury fixtures. It happens when you invest in your project, keep to your plan and sweat the small things.
About the Author
John Warren is founder and CEO of Lima One Capital, a national lending company that serves residential real estate investors—both home flippers and landlords—with innovative financing options.