Boosting Property Value and ARV with Strategic Home Improvements
Imagine purchasing a slightly worn-down house and lovingly restoring it to sell for a profit.
This process, known as “house flipping,” is where my real estate career began a few years ago. Every day I would call over 150 real estate agents in the South Bay of Los Angeles and ask if they had any distressed properties hitting the market soon. The investment company I worked with purchased these homes and flipped them for a profit.
Since working with that company, I’ve been consumed with the idea of flipping houses as an income stream. Although I haven’t dipped my toes into flipping yet, I’ve spent countless hours researching and dreaming about the types of homes I can see myself restoring from drab to fab.
The key to a successful flip isn’t just about designing a kitchen pretty enough to be featured in Architectural Digest; it’s also about knowing how to calculate the after-repair value or ARV.
The ARV is the future value of a property after it’s been restored. Any successful flipper must know how to calculate the cost of the repairs against the estimate of the property value once it’s market-ready.
Understanding the ARV of a property can make or break a house flip because it determines how profitable you’ll be from the project (and you DON’T want to be in the RED!).
If you’re considering flipping a home, here is a list of projects that usually increase the ARV.
Kitchens and Bathrooms
Kitchens and bathrooms are the main selling point in most homes. Upgrades like modern appliances, new countertops, and chic cabinetry in the kitchen or a luxurious soaker tub in the bathroom can dramatically increase the ARV.
I don’t know about you, but I would never buy a home with one bathroom! In fact, most people wouldn’t. If a property only has one bathroom, adding another can boost the value significantly.
Curb Appeal
Investments in a home’s exterior, often known as curb appeal, make a big difference in the ARV. After all, the curb appeal is what draws buyers in to begin with.
Projects like landscaping and the addition of visually pleasing elements such as manicured lawns, vibrant flower beds, and trimmed shrubs can create an inviting environment.
Some simple projects include adding a new front door, particularly one that aligns with modern design trends. Additionally, a fresh coat of paint or siding, especially when it matches the neighborhood’s aesthetics, can also breathe new life into a house and make it stand out to potential buyers.
Increase the Living Space
Maximizing the living space can significantly enhance a property’s value. You can finish basements, add bedrooms, or expand existing living areas. A finished basement doubles the home’s functional area, appealing to diverse buyer needs from entertainment spaces to home offices.
Additional bedrooms not only cater to larger families but can serve as a guest room if the buyer has a lot of guests or even an income source if they place it on Airbnb.
Technological & Energy Efficient Upgrades
Buyers are willing to pay more for a home with a few extra bells and whistles. Smart features like thermostats, advanced security systems, and home automation are attractive buyers’ incentives.
Another thing that buyers love is a home that is energy efficient. Adding energy-efficient appliances, better insulation, and solar panels can boost the appeal when you sell since they help the buyer save money in the long run.
From everything I’ve written in this article, the most important thing I should stress is that the color and materials should complement within every area of the home for a cohesive look. You don’t want to pour money into a flip, and it sits on the market forever because nothing matches.
Many flippers overlook this aspect and take shortcuts, which buyers notice.
Have you thought about flipping a home or flipped one before? Leave your thoughts and advice in the comments.
