Maximize Flipping Profits by Thinking Like a BuyerBy JD Esajian on February 1, 2019
The most profitable house flips are the ones where you can create a bidding war between buyers. To do that, you need to be able to think like buyers in your market. It is not enough to follow a cookie cutter template on every flip. You can have a general idea of what you want to do, but every property should have its own unique stamp and flair. By doing your homework and on the area and looking at what property characteristics buyers want, you can tailor your work to the market. That will increase demand and ultimately help you improve your bottom line. Here are five important items that almost every buyer wants in their property.
- Kitchens/ Bathrooms. You don’t need to be involved in real estate to know that kitchens and bathrooms sell houses. Think about the parties or get togethers you have attended recently. There is a good chance that you most likely congregated in the kitchen. Even if the rest of the house has ample space the kitchen is the likely meeting spot. If you are going to only focus on two rooms in the house it must be the kitchen and bathroom. With your kitchen you need new, fresh countertops, updated flooring and modern appliances. There has been a growing shift towards countertop dining and center kitchen islands. The same concept must be applied to the bathroom. For as little time as we spend in the bathroom, it is a central point among buyers. The shower must feel new and modern, however you plan to update it. There must be adequate storage and have a clean, open feel. With any flip almost always start with the kitchen and work your way from there.
- Open Floor Plan. It is always interesting to look back at how houses were built a few decades ago. Depending on how old you are, there is probably quite a change between your current home and the house you grew up in. Today, there is a huge demand for open space and an open floor plan. No longer do buyers want dedicated rooms and walls throughout the house. It often makes more sense to knock down a wall and combine two rooms. The kitchen and dining room is a great example of this. The formal dining room is still around in high end homes but is slowly being replaced by expanded kitchens. The more open space you have the better the home will flow and the more appealing it will be to buyers. Even if this means getting rid of a small room, it is something you should seriously consider.
- Storage. We have more stuff today than ever before. Even though it is easier than ever to get rid of things, we often hang onto them. For many buyers, it is important to be able to store all the items they want to move with them. A hidden storage area is the garage. There are plenty of things you can do to make the garage much more appealing. Instead of the basic garage layout, you should provide storage suggestions that don’t disrupt the flow into the home. A quick trip to any big box home store can give you a handful of great ideas. In the exterior you should focus on expanded closet space in addition to attic space. A larger walk in closet may feel like a waste of square footage but will be much more appealing to buyers. They can love everything about the home, but if they can’t store their clothes they will look for alternatives.
- Dedicated Office. More people work from home than ever before. With technology growing at rapid speeds this is a trend that should continue for the foreseeable future. A home with a dedicated office is very attractive to today’s buyers. This doesn’t mean you should sacrifice a bedroom or bathroom, but you should think of ways to incorporate it downstairs or in other areas of the home. The office doesn’t need to be overly big, but it should have a handful of outlets, room for storage and a plenty of light. An office can take the place of a toy room or cut down on the finished basement. You may think of this as wasted space, but most buyers want somewhere they can work from home.
- Exterior Updates. It is not enough to solely focus on the interior of the home. Obviously, interior updates are essential in any house flip, but you can’t ignore the exterior. All buyers want somewhere they can hang outside. This is even more important if your flip is located in a warm weather market. A deck or patio area provides tremendous return on your investment. For not a tremendous amount of capital you can add a deck that your buyers will really enjoy. One exterior item to stay away from is a pool. A pool is either hit or miss when it comes to buyers. In warm weather locations it is a must but everywhere else it may not be as appealing as you think. Many buyers don’t want to maintain the pool and would rather have the yard space. Whatever you decide you can’t ignore the exterior of the property.
As simple as it sounds you should always think like a buyer before committing to any work on your rehab. Buyers will ultimately determine your bottom line.