House Rehabbing San Francisco: 6 Tips for Making Big Bucks
San Francisco real estate business is an expensive option. It yields high profits but requires some work. You have to pick the right property at the right location at the right time. San Francisco real estate is a hot market. Competition is stiff and investors predict a price increase very soon. This article shares 6 tips for house rehabbing in San Francisco.
6 Tips for House Rehabbing in San Francisco
1. Understand your market
As the bay area expects another house purchasing season, many will assume it is going to be a tough deal. Families, entrepreneurs, and small businesses are going to be your customers. If you are planning to make some money, understand the real estate market. Critical data evaluation is necessary to succeed in the Bay area real estate.
2. Know where and How to Spend the Money
Bay area houses cost about $1,000,000. You do not have to own all the cash, but like any investment it requires some serious thinking. Identify your money source. You’ll need at least 20% down payment to make a purchase. Add all the house flipping costs, insurance value, taxes, and interest rate and you’ll see that real estate is the most expensive investment of its nature.
You cannot enter this market without sufficient money. Do not expect immediate Return-On-Investment. Generally, it takes 3-6 months to sell a house. In my experience, you should be ready to block your money for 6-9 months.
3. Diverse Neighborhood
San Francisco is a busy market. It is a hard to find a diverse neighborhood, but with some effort, you can choose the right spot. Look for vacant houses that require minor cosmetic changes. Cosmetic makeup means you only need to change the painting, wallpaper, and decorate the house with a little furniture. It does not require lots of money. In some cases, you can perform home renovation yourself. If you are not a home renovation expert, hire professionals to do the work. Here are some tips:
1. Only work with experts.
2. Do not work with companies that require 50% upfront payment.
3. Write everything in a legal contract. Write down the penalty for late work. A legal contract is the best way to avoid extra costs and extra time.
4. Make it Convenient, but do not get emotional
House flipping seems like an art. You have to renovate the home as an interior designer. Make it appealing and convenient for new families, but do not overspend. It doesn’t make sense to do woodwork for 10,000$. This investment won’t be worth the money. It is not your home!
Treat it like a business product and make sure the costs won’t eat the profit margins. Do not overspend and do not overprice.
The house price is estimated according to the lifestyle features, convenience, and surroundings. People will compare price with the average price. Let’s say the average price is 85,000$. You cannot sell a home for 98,000$ in that location. Reduce the costs and price the home around 89,000$. (Leave some room for price negotiation. )
5. Keep it Clean & Furnished
Investors spend thousands of dollars in house renovation. They design the home carefully, but few people take the time to clean and furnish the home. It is a clear fact that furnished houses sell quickly than dirty homes. Furniture gives it the shape of a home. Prospective customers can feel their new home. It won’t cost much to add some tables and sofa, but it can save you months.
6. Marketing and Lead Generation
Once a house is ready, you need to find buyers. Referral marketing and online marketing are the best ways to attract customers. Yellow pages, directory submission, real estate websites, marketing cards and Realtors can be your options.
Real estate investment requires massive spending on marketing tasks. Unlike other business markets, you cannot spend 5% of profits. Aim for 25%-30% expenditure on the marketing. You can only spend this much if you are an established real estate agent or company. If you are a newbie to market, allocate a monthly budget and stick to it. It can be just 250$, but the goal is to keep going.
Real estate marketing is a long-term investment. You’ll see results from your efforts in some long intervals, like five years or 10 years, but that is the best strategy because real estate income multiplies significantly.
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