There are a lot of myths surrounding home renovations. If you’re one of many people who are interested in the fix and flip business, you need to know as much information as possible about this industry. Here are the facts you need to know about fixing and flipping homes and home renovations.
Saving Time and Money
Fixing and flipping homes is a lucrative business, but only when it’s done right. There’s no quick fix or easy solution for making home renovations and repairs. DIY repairs can take months or years to complete depending on the severity of the damage the house sustains. Contrary to the popular belief of many people, flipping a home is not a get-rich-quick scheme. Small-scale DIY jobs and minimal repairs can save you time and money but not major renovation projects. The average return on investment (ROI) for renovating and flipping a home is 10% to 20%. For financial clarity, find out the selling price of the house once you make the necessary repairs and renovations. Decrease the selling price by 75% and subtract the cost of repairs to get a general idea of your profit for flipping the home. You need to know your limits and when to call a professional.
You Don’t Need the Help of a Professional
Whether you’re a beginner or an advanced home renovation expert, the help of a professional can be beneficial for many reasons. Most people don’t hire professionals because they want to save money, but not hiring a professional when you need one can result in costly repairs to damage caused by inexperience. Don’t be afraid to ask for help once you notice the project becoming overwhelming. The earlier you ask for help, the more money you can save on expensive professional repairs.
Guaranteed Return on Investment
Another myth regarding flipping homes is a guaranteed return on investment. Beginner home renovators believe filling a home with expensive upgrades will get them a mega payday, and this is not always the case. While upgrades can increase a home’s value, there is no guarantee you will get back the money you spent. If you do, you’ll break even and won’t make a profit. There’s a chance the upgrades you put in a home will return the money you spent and make a profit for you, but this is a slippery slope, a dangerous pitfall that can put you in debt. You can attempt to increase the price of a home, but you risk your home remaining on the market for many years.
Adding a Pool is a Sure Sale
A pool can be a beautiful addition to a home, but the truth is, not everyone wants a pool in their backyard. Before you add a pool to a property, you need to check the climate for the location and consider the financial impact. Checking the climate will let you know how much use the residents will get from the pool. Areas with colder climates require money for frequent maintenance. Adding a pool typically only returns 39 cents on each dollar you spend. Once you consider the total financial impact adding a pool will have on your entire investment, decide if you’re adding a pool to the home or not.
Adding a Bedroom vs. a Bathroom
Another myth of home renovation is an added bathroom is more beneficial than a bathroom. Before you weigh on in this matter, check the room ratio of your home and look for apparent imbalances. You don’t want a home with a lot of bedrooms and only one bathroom because it’s not an ideal living situation.
Not all home improvements are created equal, and not all upgrades and repairs add value to a home. Before making any hasty decisions, research which features home buyers are looking for and figure out how to incorporate them into your home.
Here at Wildcat Lending, we offer different lending programs that help with home renovation. We’re here to help you get your home renovation project off the ground. Contact us or apply today for one of our hard money loans. We’ll do everything we can to get you approved for a loan.