If you're a home flipper, maximizing your after-repair value is the key to healthy margins.
But that's easier said than done. For one, it means you first need to buy the property at a steal. After all, the lower your purchase price, the more room there is to improve.
You also need to minimize your repair costs, including what you pay for contractors, materials, etc.
More important than all this, though? That'd be choosing the right repairs to make in the first place. Market research and a good agent and contractor can help steer you in the right direction here, but so can cold, hard data.
Fortunately, iBuyer Opendoor just released some that may help. The company analyzed data from its first-quarter sales across all 21 markets it operates in. It then pulled out the five home features that are apparently reducing home values the most. Here's a look at those features, how much they hurt your property's value, and what it costs to fix them.
The worst home features for your home-flipping value
The worst offender is a sloped backyard, according to Opendoor's analysis. That reduces your resale value by a whopping $6,400. Fortunately, this is a pretty easy fix. HomeAdvisor estimates the average lawn regrading project at just over $1,900. On the high end, it can go up to $2,947.
Laminate countertops and chipped/low-quality paint also come in as some of the most dangerous features for your bottom line, knocking $4,500 and $4,400 off your property value, respectively. Countertops are a bit pricier to replace than paint, though the average granite and marble installations come in around $3,000, meaning there's still plenty of room to boost that ROI.
Finally, there's carpeting, which decreases a home's value by $4,100. This one is harder to estimate repair costs for, as it depends on just how much carpeting you're dealing with. For 1,000 feet of tile, though, you could expect to pay around $10,000 on the low end. Obviously, this isn't economical, so you may just want to upgrade the high-traffic areas like the living room, dining room, or hallway to save on costs.
Here's a quick recap of the most value-busting home features and the ROIs on fixing them:
|Feature||Home value deduction||Cost to repair||Investment gain|
|Laminate or tile kitchen counters||$4,500||$3,000 (for marble)||$1,500|
|Chipped or low-quality paint||$4,400||$1,790 (full interior)||$2,610|
|Carpeting as primary flooring||$4,100||$10,000 (1,000 square feet)||-$5,900|
Having commercial neighbors is also on Opendoor's list (reducing your property value by almost $6,000), but that's more a question of location than renovation.
The bottom line
When it comes to flipping a house, the projects you take on matter. Make sure you do your research, and choose your renovations carefully before moving forward. The choices you make could have a huge impact on how much you profit upon resale.
Get the 'Dirt on the real estate market
Are you looking for the next hot real estate market? Want to know how new rules and regulations could impact your next home purchase or real estate investment? Would you like to find out which improvements to your property will get you the most bang for your buck? We cover all these things and more in our newsletter, Paydirt.
Sign up here to get our best insights delivered to you.