Real estate holds the age old charm of greater profits for potential investors. Now that the real estate market has completely revived from its doom, property prices are skyrocketing. However, instead of buying rental property and making money off it, investors are more interested in acquiring low-priced properties and upgrading them for resale.
Over the past couple of years, flippers specifically in the Chicago area have reaped almost 74.2% returns on their investments. This makes flipping homes an ideally lucrative investment option for real estate investors. In case you’re considering pitching your money in flipping homes, here’s what you’ve got to be mindful of:
Fix the Numbers & Stick to Them
Depending on the amount of profit you wish to earn, set a cost+rehab ceiling for all your dealings. For example: if you wish to earn at least a 30% profit on all your flipping deals, you need to make sure the cost of purchasing and upgrading the property does not exceed 70% of its After Repair Value (APR). This will help you efficiently cope with any fluctuations in the market throughout the year.
Spend Only On the Value-Addition Elements
This is obviously basic stuff, but the 2017 real estate buyer is far more knowledgeable when it comes to buying homes. They wouldn’t be willing to pay for anything that for them doesn’t add value to the property nor has some sort of significance in their lives. So an HVAC and a fully renovated bathroom might attract them but a pergola in the backyard – maybe not so much. This also means that you need to be extra careful about upgrading homes; do it with adequate knowledge of the target buyers’ lifestyle and family size.
Besides all this, when it comes to reaping maximum profits out of your investment, a lot depends on how good your realtor is. An experienced real estate agent has the market insights and knowledge that allow you to maximize the earnings on every dollar you invest. So, make sure you sign up with a top-of-the-list realtor in Chicago.