There are so many types of properties and fix and flip real estate investing strategies that can be utilized to make big profits. The best one for you is the one that is the most exciting for you. Yes, you want to have some passion for this business and you want to do the types of investing that is of the most interest to you. That is when you will attain the highest level of success.
For the most part flipping involves things like
- bringing the property up to current code compliance
- cosmetic updates
- interior and exterior paints
- perhaps new doors and trim work (if very old and dated)
- new kitchen countertops, fixtures and appliances
- exterior curb appeal
On higher end flips you may consider things like
- new kitchens
- new bathrooms
- new roofs
- outdoor kitchens
The key is to renovate to match the area and not to over improve the home to surpass the value of the area.
My favorite fix and flip is the value play!
In the spirit of following what you are most passionate about, I like buying properties that you can convert to a higher and better use (The Value Play)
The multiunit to condo conversion
My all-time favorite flip was a 4 unit apartment I converted to a 4 unit condo project. This property literally did not require any renovation. In fact we did not have to lift a hammer. This was all legal work.
All I had to do was to hire an attorney to draft the paperwork converting the title 4-plex to 4 condos. Meanwhile I hired an architect to draft an architect’s opinion (a piece required to make the legal conversion). Anything the architect suggested needing to be altered to match that of a condo was required. In this case based on my earlier diligence I already knew (or highly suspected) there would be little to no work required. Fortunately there was nothing. This property for all practical purposes was built to specs of a condo.
I took a property that I bought for $455,000 and converted to 4 units that sold for $175k (average per unit) doing the math $175,000 four times for $700,000 not bad for 3 months’ worth of legal work.
Incidentally, as this property was a 4 plex, the units remained rented and was cash flowing the entire time.
Finishing off the lower level (basements)
When I lived in the Midwest, where basements were prominent, I loved buying late model homes that did not have completed basements. The shell was already there. The heating and cooling system was already in place. It was as simple as adding interior walls (egress windows if needed) adding a bathroom (plumbing was usually already roughed in) and putting electric outlets and light switches in.
These value plays were always a lot of fun. They always added additional living space which increased value for a very low cost. They could be done very quickly, so I did lots of them. There was always a very good return on these investments.
Adding additional bedrooms
In the South where I now live, we do not have basements but we have a number of very large square foot 2 bedroom homes that are perfect candidates to convert to 3 bedroom homes. This requires a little more searching to find a good floor plan that is conducive to adding a bedroom to its existing floor plan, but when you do you have a quick value play. That can add lots of value with little time or capital. Often the rest of the house requires very inexpensive cosmetic upgrades.
Personally I have found my best success in flipping that generates a value play, converting a property to higher and best use. The idea for best profitability for you is to find what you enjoy the most and perfect your niche.