Photo courtesy of DIY Network
As seasoned investors well know, each renovation presents new challenges that, if miscalculated, can bust budgets and tank an opportunity.
With more than 30 home rehabs under her belt, Bargain Mansions host Tamara Day has plenty of tools to keep a project on track and under budget. Think Realty sat down with Day to discuss her strategic advice for flippers hoping to avoid headaches while increasing returns.
Study up, build a strict budget
All too often, Day has seen flippers get caught up in the excitement of renovating a home. Thrilled by the adventure of revamping a space, investors can skip important planning or poorly research a budget, setting the project up for delays, added costs, or worse.
“I think that in home renovations it’s easy to get caught up and overspend,” Day said. “I’ve bought houses from people where they’ve started the renovation and they just get in over their heads and then they walk away. Do your research and get as much education as you possibly can.”
Have inspectors and contractors make solid bids
While it might add some cost and time, inspections are imperative to uncover hidden problems that could be a nightmare down the road, Day said. In the same vein, Day recommends that investors walk through a property with a licensed contractor to detail what work needs to be done and how much it will cost. Adjust your budget accordingly and then limit additional flourishes to the project.
“Having your licensed contractor walk through the project and give you solid, firm bids is incredibly important to staying on budget,” Day said. “Make sure that you’re checking yourself when you’re putting in those little splurges and make sure that they really fit the budget.”
Track homes sales data
Tracking properties that have already been sold is an important step in setting a competitive price. To determine your house value, find homes that are similar in size, condition, and location. Compare similar listings’ prices for an extended period to gain a better understanding of your market and to maximize your returns, Day said.
“Knowing your comparables before you buy is huge,” she said. “Track more than six months in previous home sales. Track it for a year or track it for two years to find what the true comparable is, because one house can change the comparable for a neighborhood really quickly.”
Read Tamara Day’s feature in the July/August issue of Think Realty Magazine here.
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