November 1, 2014
The distressed properties or properties in a bad condition come in the category of Flip property. Flipped property is a kind of both the aforementioned properties. The business, in which people buy the properties in a bad condition, repair them and sell them out on higher rates is called distressed or flipped property business.
Profit Percentage
The profit percentage of investing in a property in a bad condition depends on your expertise in the real estate business and your after-buying investment in the property. Generally, 10 to 15% profit is generated from a property in a bad condition. However, if you sell the property as it is, then the profit percentage can be as low as 2% and as high as 5%.
How Profit Percentage Can Be Increased?
The profit percentage of a property in a bad condition can be increased by several techniques.
Assess The Property Before You Buy It
Assessing the property means estimating the predicted profit of the property. There are several important considerations you need to make when assessing a property.
Assess The Structure
The structure of a property is inspected by the buyers, who might come with an architect or a constructor friend to check your property. Assessing the structure of the property saves you from many possible hazards, for example an uneven floor of the lounge, a badly constructed garage roof, the floor of the bathroom with no slope to the gutter and the windows in the opposite direction of the ventilation. These all are the problems which require a heavy budget for repair. Such properties are not favorable for generating a greater profit.
Assessing Market Value
For assessing the market value, you should always find the price of the property (that you are going to buy) in the real estate market. Then, compare the price of that property with the price of other properties which can be compared to this property. Finally, estimate the expenses of the renovation. If the expected profit after renovation is 10% or more, then the property is favorable for real estate business.
Renovation Of The Property
Once you buy a property, now it is the time for renovating it, or in other words, working on it to sell it for greater profits. Renovation does not mean that you have to install aqua flooring in the property. This type of renovation is meant to cover up the problems and damages to the property in an indistinguishable manner.
Refresh The Exterior
The exterior of a property is the first thing that attracts the buyers. It puts a ‘first impression’ on the buyers. Change the color of the door and place statues on the front. Trim the outer grass and cover the walls with plants. Finally, place new fancy lights on the external door. You can buy these lights from some sale market.
Renovate The Walls
Fix the damages of the walls. You can use Plaster of Paris for filling the empty spaces in the walls in a much lesser money. Then, repaint the walls with a new thick layer of paint. Research on the latest fashion of the paints. However, you should always choose simply paints for renovation. Fancy paints charge much more than simple paints. Use fresh colors. Place fancy lights on the walls .