As for the market itself, the fix and flip industry is firing on all cylinders in recent years. This method is a great way for new investors to get into the industry and be successful on a small scale right off the bat.
In Q1 of 2022, there are a few stats that support investors who want to get involved in real estate investment properties and complete fix and flips. According to an article titled “The House Flipping Statistics Investors Should Know in 2022” written by Jack Caporal, almost 10% of all home sales were the direct result of a fix and flip in Q1 this year. Additionally for investors, the average gross profit from a fix and flip in Q1 of this year was $67k. In 2021, over 320,000 homes were flipped by real estate investors. Numbers like this can attract anyone to the industry who has some business savvy and is ready to capitalize on the opportunity at hand.
When investors are researching which home improvements to make to increase the value of their property, there are a few different avenues they can go. One of the strategies that will always resonate with prospective buyers and positively impact the ROI is going with the remodel of the kitchen and or bathrooms. These two rooms are always crucial when it comes to grabbing the attention of people who are interested in the home. Countertops, sinks and faucets, light fixtures and even shower heads are all things to consider when remodeling the kitchen and bathroom. Appliances are also a must for the kitchen, and most are energy efficient these days which allows the buyer to save money on utility bills. Refrigerators, stoves, and microwaves are all opportunities to impress buyers and can allow investors to raise the listing price when all the updates are made, and the appliances are installed.
Some of the more intensive renovations include finishing a basement or adding usable square footage to the house. This is not the easiest or quickest way to increase the after-repair value (ARV) of a home, but the effort can be well worth it. These improvements or additions can be labeled as nonessential, but they are noticed and appreciated by those prospective tenants when the home is completed. Everyone has those visions of what finishing their basement would look like or how nice it would be to add a dining room to their home to have more space in the kitchen. However, executing those ideas is another thing entirely. The investor taking the time and effort to complete those additions or finish previously unfinished areas of the home should take that into consideration when deciding what to increase the market value of your investment too.
Once renovations are done, the most essential part of this process can begin. By no means is the rehab work not vital but assessing how much value you have added to your real estate investment property is crucial. For real estate investors, the easiest way to do this is to head to Zillow.com (or similar real estate websites) and perform a search of the area based on zip code. Zillow and sites that do the same thing are great assets for investors to be able to use because of the attention to detail that these websites can provide. You can easily find comparable properties in the zip code and find out what you should be pricing your improved real estate investment property at. Aspects of the property that investors should be focusing on are square footage, room count (bed and bath), and property amenities. Also, checking what houses have recently sold for in the area, rather than what houses are currently listed on the market for is a smart practice.