flipping houses is a lucrative real estate investment, and the best way to achieve a successful outcome is by choosing upgrades that offer the best return on investment (ROI). Many people prefer to get hard money loans for fix and flip funding because they offer quick and easy access to money.
Among the top reasons why real estate investors prefer hard money lenders over conventional lenders is because they don’t require credit checks. Most private money lenders know that acquiring stellar credit isn’t possible for everyone, and a low credit score doesn’t necessarily mean that they are incapable of being financially responsible.
What hard money lenders do look at is the potential of the property and your renovation plans for the property.
As a leading private financing firm in New York, we’ve funded many fix and flip projects in different states with varying budgets and plans. Choosing the right property repairs is critical to the success of your project simply because investing in the wrong renovations increases overall costs and reduces the flip potential.
To help investors make the most of their investments, we’ve put together a helpful guide with the top renovations and upgrades that have historically had the best chances of out
1. Target Single and Small Multifamily Properties
Small multifamily units and single-family homes tend to bring in the highest ROIs. The key is to look for rougher-looking homes with no major structural issues in otherwise good neighborhoods. Make changes that put the property on par with other homes in the vicinity so that you don’t outprice the neighborhood. Prioritize the area of the home where you spend most of your time, including the main dining, living, bathroom, and kitchen areas.
2. Replace the Siding
Dented, faded, or chipped siding can put off potential buyers instantly because it suggests poor overall maintenance. Unlike new windows or roofing, siding maintenance tends to have a highly positive impact, and you’re likely to recoup the bulk of siding repair and replacement costs. To further boost the value of the property, consider a siding color that matches the higher-end homes in the neighborhood. Be sure to choose neutrals such as light grays to appeal to more buyers.
3. Upgrade the Front Door
The front door is the focal point of your home and is the first thing visitors see when they enter the house. Replacing the front door can get you the best dollar-for-dollar return on the investment. Don’t go for something too bold or dramatic that may turn off people, but instead, consider something popular that matches the aesthetic of your home. If you’ve got the budget, investing in a new garage door can be equally profitable as it not only increases curb value but also adds functionality.
4. Enhance Curb Appeal
First impressions have a major impact on potential buyers—believe it or not, most buyers make decisions about the home within the first 10 seconds of arriving. A good technique is to take a few photos of the home from a passerby’s point of view and determine what seems lacking. Is the paint chipping off? Is the driveway clean? Does the lawn need mowing? All these little details will make a world of difference in your listing photos as well as in-person visits.
5. New Flooring
If you’re operating in a good neighborhood where buyers want high-quality furnishings, then hardwood flooring can increase the value of your flip. For a cheaper alternative, consider engineered wood flooring that costs about $6.00 per sqft. Another option many house flippers look at is carpeting. Although most homebuyers don’t want carpeting, it may be worthwhile to replace an existing dingy carpet with new carpeting, if not anything else.
6. New Bathroom Fixtures
Modern bathrooms are some of the most desirable upgrades that homeowners want. They can bring a high ROI but redoing the entire bathroom might not be entirely possible. In this case, redoing the bathroom fixture and the vanity might be your best option to give your bathroom an updated look. The best part is that you can find a range of options that matches your budget and looks good.
7. Upgrade the Kitchen
According to Remodeling Magazine’s Cost vs. Value 2019 Report, kitchen renovations ranks as one of the top 3 home renovation projects that homeowners undertake. However, house flippers should approach kitchen renovations with care. Most importantly, you need to look at other houses in the neighborhood and see what amenities they have to offer. Do your due diligence, calculate costs of the changes, and how they add to the after-sale value. If you don’t have the budget to take on a complete remodel, you can consider cheaper alternatives such as new cabinet fronts, fresh paint, updated hardware, and new sinks.
8. Add a New Deck
New remodeling projects don’t necessarily have to be invasive or too major. For instance, a new deck can be an excellent addition to the house. It extends the outdoor living space and can make great room for outdoor dining or fun barbecues in the sun. If there’s an existing deck on the property, you may be able to reuse the existing decking by flipping over the boards and pressure washing them. Sanding and re-polishing the boards after can make them look as good as new.
9. Increase Living Space
The best fix and flip projects aim to increase living space for the occupants. This can include breaking down walls to make larger rooms, including smart storage and even new outdoor spaces. If your fix and flip property has some unclaimed outdoor space that’s unused, clear out all the unnecessary clutter and build a pretty patio with gravel or a raised deck.
10. Prioritize Structural Issues
Ideally, you shouldn’t buy homes that have major structural issues because they require quite extensive repairs. However, before you make any changes, it’s important to ensure that you’ve covered all your bases. Get the house checked for termites, mold issues, and foundation problems. If these are the issues preventing people from buying a home in an otherwise good neighborhood, then addressing them could give you a solid ROI when you flip the house.
11. Repaint the Interior
Many people underestimate the impact that a fresh coat of paint can have. Whether you want to paint the exterior or interior, the change can have a substantial effect on the way your house is viewed. Although it’s always important to get neutral colors, you still have room for improvement. For instance, you can opt for white paint in certain areas to increase natural light and make the room look more spacious. You can also separate certain areas with color blocking techniques for maximum effect.
12. Invest in Safety
Safety is a key concern for millennial homebuyers. But the key is to make it as accessible and user-friendly as possible, and that means smart solutions. Apart from regular safety features such as locks, well-lit areas, and deterrents like cameras, you also want smart security solutions that allow homeowners to keep tabs even when they are aware.
13. Update Lighting Fixtures
If you’re not convinced by now, here’s another example of how fixtures and hardware can make an impact. Modern, neutral design is essential if you want to make a return on your investment. However, you should pay attention to how you install new lighting. Use lighting to accentuate different parts of the house, such as the windows and ledges, to create a stunning view at night.
14. Add a Bathroom
A new bathroom can increase the value of your house by a considerable amount. According to the real estate trend reports, bathrooms are the top renovation project that homeowners want to undertake. Clearly, a well-designed modern bathroom is something homebuyers are also looking for. You could go for something simpler like a powder room, or you could add an en-suite bathroom to the master bedroom. Families, in particular, are willing to pay more for such facilities, and an additional bathroom is sure to catch their eye.
15. Add a Carport
If your house has a large driveway or any unused space adjacent to the property, then consider converting it into a carport. Most modern houses prefer adding a carport with a classic pergola over a garage. A good pergola or overhead transom not only looks great, but also offers ample car coverage. Moreover, compared to a full-fledged garage, it is light on the pocket and easier to maintain.
16. Eco-friendly Upgrades
In the aftermath of global warming, there has been a conscious shift towards more sustainable lifestyles. Eco-conscious consumers want to apply eco-friendly practices to every aspect of their life. Examples of popular upgrades include energy-efficient lighting and appliances, solar panels, NFRC rated doors and windows to reduce energy wastage. If you’re planning to flip a home in a younger neighborhood, then these upgrades are particularly important because Millennial homebuyers value green initiatives and look to reduce their carbon footprint.
17. Incorporate Smart Tech Features
Tech-savvy buyers enjoy the convenience and long-range accessibility offered by smart homes. Right now, everything from smart lighting and temperature control to security systems to automated sprinklers can get you a high return on investment. While this investment may not always pay off in middle-class neighborhoods, it is an appealing feature when you’re flipping luxury homes in upscale communities.
18. Lawnscaping
Not every property you buy will have lush greens stretching as far as the eye can see. However, even a small patch of lawn can be transformed into a gorgeous garden that accentuates the curb appeal of your home. Apart from the fact that it instantly boosts curb appeal, many homeowners enjoy a bit of outdoor space. Whether it’s a quiet space to enjoy some early morning yoga or a play area for the kids’ swing set, well-maintained outdoor lawns might just give your home the edge it needs to entice homebuyers.
Nationwide Hard Money Lending Solutions
Are you looking for fix and flip funding to kickstart your investment in real estate? Insula Capital Group is a leading nationwide private money lender & real estate investment company that has worked with many real estate investors to provide fast and flexible funding solutions.
We offer attractive loan programs for commercial multifamily buildings, new construction projects, and fix and flip ventures. When you work with the experts at Insula, you can rest assured that you’re getting competitive rates and years of experience to back your venture. Our clients love that we offer loan approvals within 24 hours and get you the money within five days so that you can make use of any time-sensitive real estate opportunities.
In line with our goal to provide fast solutions and excellent customer service, investors looking for fix and flip funding can see if they prequalify for a loan or fill out the Quick Application form that requires minimal documentation. If you already have a solid plan for your fix and flip project, fill out the Full Application form and enjoy more accurate pricing and faster processing services.
Our Fix & Flip Loan Financing Program comes with lightning-fast response times and a simplified application, quick inspection, and an easy closing process. The best part is that each loan is tailored to fit your client’s individual needs. We offer loan amounts up to 90% of the purchase price of the home and 100% of the rehab costs—all of that with no prepayment penalties. Reach out today to our loan officers today to learn more about our hard money real estate loans.