Want to know how to spot the next up-and-coming neighborhood? How about which part of the house to invest the majority of your budget in? There are numerous factors to consider when it comes to the business of fix-and-flip investments. Here, Inman.com offers four tips for those looking to invest.
Think location, location, location
Pay attention to areas that are near good schools, restaurants and shopping centers with low inventory. Resell data can provide a lot of valuable information. A “hot” neighborhood for a flipper, for example, will have really low inventory—specifically, low remodeled inventory. Another indicator is other flips. Investors always are looking at neighborhoods that are about to turn, so if you’re driving around and see dumpsters in driveways, that’s a good sign.
Follow commercial developers
When commercial developers move into a neighborhood to renovate old shopping centers, that typically means they are seeing growth in that neighborhood, and residential real estate will follow that trend. Meanwhile, look for new local restaurants in the area. Restaurants typically seek out less-expensive real estate, so they’ll take a risk in an area and draw the crowd to it.
Pay attention to design trends
It’s important to spend money on renovations where it counts most, such as the kitchen and bathrooms. In terms of architecture trends, make sure your flip blends well with the neighborhood. For example, you could spend a lot of money getting the best of the best for your home, but if it’s Mediterranean-style in a neighborhood with a cottage look, it’s going to take twice as long to sell. Notably, a more modern design aesthetic is more popular today than a Tuscan look.
Consider the quality
As the saying goes, “You can put lipstick on a pig.” However, if a buyer gets into a home and is unhappy with the renovations, it will have a trickle-down effect on the entire neighborhood’s property value, and the next investor’s high comp will take longer to sell. Before the house hits the market, be sure to spend money on big-ticket items that ensure a sound house and to complete an inspection after the remodel to catch anything that might have been missed.