Real estate businesses can be highly lucrative, with large profits possible. In fact, according to the National Association of Realtors (NAR), in 2019 alone, there were over 5.3 million existing home sales at an average sale price of $271,900. This equates to a total value of almost $1.5 trillion in residential real estate transactions.
Flipping properties is one profitable way investors can make money from real estate investments. During a flip, investors purchase a fixer-upper property and add value by renovating it and putting it back on the market for a higher price than initially paid. The goal is to create a quick turnaround on their investment and profit from the difference between the purchase and the selling price.
The profitability of flipping properties can vary significantly depending on various factors such as location, renovation costs, current market trends, etc. According to Zillow Research, experienced flippers saw returns of over 50% in some markets across the United States in 2020 – with Los Angeles being one of them (average return of 58%).
However, you might not know where to begin with your flipping property investment. To maximize your returns and ensure a successful project, you need to make sure that you are making the right changes to the property. From budgeting for renovations to understanding zoning laws and regulations, several factors come into play when it comes to flipping properties profitably. When considering those factors, these projects might be your most profitable choice.
Kitchen Remodeling and Upgrades
A kitchen is one of the main features buyers are looking for when purchasing a home. Kitchen remodels can quickly return over 70% of the investment, making them an excellent choice for flipping properties.
When renovating your flip property’s kitchen, focus on modernizing it. This might involve replacing appliances and cabinetry while upgrading countertops and backsplashes with materials such as quartz or granite. It would help if you also looked into incorporating energy-efficient lighting fixtures to further increase your project’s value.
Kitchen remodels, especially those that completely transform the area from gas-powered to energy efficient, will cost an average of $25,000-30,000. Still, they can generate additional value and help you sell your property faster.
Bathroom Upgrades
Just like the kitchen, bathrooms are another essential selling point for buyers. A bedroom with a modern and luxurious bathroom could decide when potential buyers make an offer on your flip property.
Like kitchen remodels, bathroom upgrades focus on modernizing the area by replacing or fixing plumbing fixtures such as showers and toilets. It will also help if you concentrate on upgrading features such as lighting fixtures, vanities, countertops, mirrors, etc. Upholstered bathroom wall panels will also add a luxurious touch to your flip property.
On average, these renovations will cost around $15-20k – but remember that a well-executed project can generate extra profits.
Garage Improvement
If your flip property has a garage, you should consider renovating this area too. For starters, you could replace the existing door with one that is more energy-efficient and stylish. You could also insulate and add drywall throughout the space for better temperature control and protection from moisture damage.
Finally, do not forget about the flooring – it can make a big difference in how modern your garage looks. Other significant improvements buyers will appreciate are painting the walls or installing shelving units.
Garage upgrades cost around $5k on average but can increase curb appeal and generate extra profits for your investment project.
Smart Technology Installation
Smart technology has become increasingly popular in recent years. Installing the latest home automation systems in your flip property can make it stand out from the competition and attract potential buyers.
Smart home systems incorporate a variety of automated devices that allow homeowners to control their security, lighting, climate, audio-video entertainment centers, etc., with a single remote or app. Smart technology installation requires an initial investment, but it is worth it since these systems will significantly increase the value of your flip property.
Smart home devices will cost around $2k-5k, depending on the project’s scope. This cost will quickly return to higher profits when your property is sold. However, you might want to take it one step at a time, with security being the top priority. You will then be able to gradually add other devices, such as lighting and audio-video systems.
Final Thoughts
Flipping properties requires careful planning and adequate research. Knowing which changes to make is essential for your flipping projects to be profitable. Depending on the project’s size, kitchen remodels, bathroom upgrades, garage improvements, and smart technology installations can all increase its value while helping you quickly recover your investment. With hard work, you should have no problem making a profit from your flipping projects!
