Remodeling for profit or passive income takes a trained eye to be successful. You do not want to overspend on the property or the remodel and then price yourself out of the market or, worse, be upside down on your investment. You also want to spend money renovating the right things in the right way to attract buyers. So you may want to consider hiring an interior designer.
As a real estate investor or a flipper, the idea is to get the best return on your investment possible. The increased costs of building due to higher material prices, labor shortages, and inflation during the height of the pandemic are still very much felt today, so the timing is now.
Here’s a story from a realtor friend, Deborah Deborah, who had luck in her favor and the timing just right!
I originally listed this property on 06/12/2020. The sellers have been the original owners since 1984. Not much had been done to the home besides a newer roof and windows. Although very spacious and in a great neighborhood, the house screamed the 1980s! Lots of oak and brass everywhere. We originally listed the home for $825,000 and, after 45 days, had reduced the price to $795,000 with still no offers.
The house still had my clients’ furniture, but they had been vacationing for several weeks. Unfortunately, the water supply line for the primary bathroom toilet sprung a leak on the afternoon of August 18. We had a showing around 11:00 that morning, and when a neighbor stopped by the following morning to put a package in the home, they discovered all of the water damage that occurred overnight. The sellers filed a claim with their insurance company, as the damage to all three floors was quite extensive. Once the home was dried out and the restoration company removed all the debris, the choices for my clients were:
- Put the insurance money into the home by making the repairs, then put it back on the market.
- Sell it as is.
They chose to sell it “as is.”
Before the Magic Happened!
As an integral part of his real estate business, my brother, Rich Klatt, had done many fixes and flips over the years. Although we owned and operated Sterling Real Estate Group for over 18 years and had approximately 40 agents at that time, we each ran our own real estate businesses as well. I presented the proposition to my brother and talked to the sellers. They kept all the insurance money, and we decided to purchase it with the intent of remodeling the home.
Unfortunately, Rich was already involved in several other projects, so it took us a while to get started on the remodel after we purchased it on November 16, 2020. Together we spent months designing the home and deciding on what direction we wanted to take it. We decided to go with a contemporary and open vibe and remove all traditional elements.
We spent nearly a year ordering new everything, right in the middle of Covid, so getting materials, appliances, lighting, wood floors, cabinetry, carpet, etc., were extremely difficult, which probably delayed the completion by three months or so.
The Decision of Remodeling For Profit Paid Off
Even though the market was still very hot, we decided to stage the home and hired Heidi Kunsman to come in and truly enhance the home’s beauty.
After she was done, it truly showed like a model home! We listed it on February 2, 2022, and received multiple offers after three days. We ended up selling it for $220,000 over the list price and closed on the home on March 2, 2022, for $1,720,000.
From beginning to end, it took us 14 and a half months, but it was worth it in the end due to the appreciation of the market in general and how beautifully the home turned out. We made a nice profit for the company and were able to reward our contractors with huge bonuses for all the work they put into it.
After the Magic: Totally Transformed
Success in the flip-and-fix business is all about what you pay for the home. Right now, I strongly discourage people from doing it, no matter the price, because the market depreciates. Too risky, especially with prices for materials being so outrageous due to needless increases in oil and gas, government overreach and regulation, higher interest rates, and the country is in a recession. Homes are generally purchased by those who NEED to move, not those who FEEL like moving. We got lucky with the timing because the market was completely different just one month later.
Thank you, Deborah, for sharing your process and for allowing Designer Premier to be part of this amazing transformation.
If you are looking for a great realtor, who goes above and beyond, we highly recommend you reach out to Deborah and her team,
Deborah Tucker, The Tucker Team / Sterling Real Estate Group, Inc.
7175 W. Jefferson Avenue, Suite 1300, Lakewood, CO 80235
Cell: (303) 475-5241
Running the Renovation Numbers
Renovating your home is an excellent strategy for homeowners for two reasons. The first, and perhaps the most obvious, is that you can remodel your home precisely how you want it, giving your living space a new life with all the modern amenities and conveniences at your fingertips. The second reason, however, is resale value.
It’s not always easy to know how much a renovation is worth to your bottom line. We invite you to check out our blog on Return on Investment and reach out to set up a complimentary interview with one of our talented designers to discuss options for updating your home.