Whether you’re a seasoned investor or thinking of getting into flipping, having a specialized realtor on your team is non-negotiable. They do more than just unlock doors; they provide the essential market intelligence that transforms a risky venture into a profitable one.
The Nuance of Comps: I know the very specific features that may have created a top-dollar sale on a comparable property that you are looking at that your purchased property doesn’t have. It could be an extra half-bath, a rare master bedroom with attached bath, or all new mechanicals, larger lot - details that drastically affect your final sales price.
Location and Resale Impact: I have an intricate knowledge of the most desirable Lakewood neighborhood locations—right down to which side of the street is preferred—and how that impacts resale value and speed.
Avoiding Over/Under Improvement: I understand the impact of over-improvement or under-improvement in relation to the comps being viewed. A flip fails when you spend $100k on renovations and only increase the home's value by $80k.
Protecting Your Margin: Most importantly, I understand the margins that need to be there when purchasing and all of the other costs (holding costs, closing costs, commissions, etc.) that need to be taken into consideration when determining your true profit margin.
Do Not Overpay When You Are Excited About A Project
Have a solid plan and budget before you start the renovations and demo. The time to plan is not when you've already started tearing out the kitchen. Every day, every unplanned change, and every dollar over budget eats directly into your profit.
The reality is, the due diligence required for an investment property is exponentially greater than a personal home. Here are just a few high-level considerations:
Permitting and Inspections: You must be prepared for what an inspection may reveal (old electrical, foundation issues, water penetration) and understand the city's specific requirements for permits on major renovations.
Hidden Costs: Beyond the sticker price of materials and labor, investors must factor in:
- Holding Costs: Interest on your loan, property taxes, utilities, and insurance for every month the house is under renovation and waiting to sell.
- Closing Costs: Both when you buy and when you sell.
Contingency Fund: Always budget an extra 10–15% of your renovation cost for unforeseen issues (e.g., discovering asbestos or a structural problem behind a wall).
