"Flipping" real estate has become extremely lucrative in recent years due to rapid increases in property values, and it has always been a reasonably secure way to make a profit. It is so profitable in fact that many individuals and families are purchasing their homes for this specific purpose. Moving into a property, remodeling it, then selling it is one of the best ways to make some money while enjoying a home of your own, and the tax benefits are tremendous. However, some people find themselves in a difficult situation when they have over improved their home so that it prices well out of their own market, and then instead of selling it for a quick profit, they end up sitting on it for far too long with monthly payments eating away at their finances. This article simply offers a little advice to avoid this kind of problem when making home improvements.
Most homebuyers are acquainted with the idea of getting a home in a good location that is not the nicest house on the block. A good location insures an increase in value, and lower end home has more room for improvement. The more work a home needs, the higher the profit should be when it is sold. But you must consider what improvements will not be profitable. Let us say that you buy a home for $300K in an area where most houses sell for $350. The obvious intention is to improve the home so that it can make that extra $50K. In order to do this successfully, you must consider the cost of each improvement against what you are trying to make. If you spend $10K on a couple of bathrooms, decide to add on an additional room for $20K and decide to put in some nice marble floors and granite countertops in the kitchen for $25K, you may come away with a really nice looking house, but you have already spent more than you could have made on a sale. You may as well have bought a $350K home in the first place and saved yourself the trouble. If you plan to stay in the home over a long period of time, the property increase will most likely make up for this, but try to consider current increases to consider how much you project the house might be worth in the future.
The most important part of this process is figuring out what types of improvements will be the most cost effective. Things like wood floors or kitchen cabinets have a large effect on the value of the home. Research your market to figure out what buyers are looking for and what is most likely to add significant value at a relatively small cost.
With careful evaluation, improving or remodeling your home can have a fantastic impact on your financial investment. Just take the time to figure out a reasonable sales goal and what improvements will be most cost effective in order to make the most of it.
About the Author: A true innovator, Von Sutten founded Ready Real Estate in order to put more money back into the pocket of the Dallas single family home buyer. Ready Real Estate has since grown to become a top Dallas real estate company and is the only one that pays its buyers a 1% Cash Back Rebate and offers Full Service Listings for only 4.5%.
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