I remember the first foreclosure property that I have rehabilitated. I didn’t make much money out of it. I really didn’t. This was not due to the fact that it was in a bad location or that it was too small. In fact, those details were well taken care of. My wife and I found a property that was big enough and fairly lucrative in a high demand part of town.
Where did you drop the ball? Where did we mess up? It really all boiled down to the extras. You have to understand that if you’re flipping foreclosed homes, you’re not doing it in a vacuum. It’s not like people would jump all over the property just because you’re flipping it. No!
They’re looking for the extras. They’re looking for a place to live. They’re looking for a place to call their very own. That’s why you have to maximize perceived value.
One of the best ways to do this is of course, to offer extra amenities like composite decking boards or some sort of additional element that enhances the overall cosmetic appeal of the property that you’re trying to flip.
I missed the memo on this. I was completely clueless about this market reality. And that’s why the first few times, the properties that we flipped didn’t really make that much money. They made money, but we weren’t really maximizing our return on effort.
If you’re reading this blog, you know how hard it is to flip a foreclosed property. It takes a tremendous amount of attention to details. It takes a lot of sacrifice as far as time and effort goes.
It really would be great to get the maximum amount of money for all the time, effort and energy you’ve invested in your project. But that’s not the case if you’re not willing to put in the extras.
So what we learned was that we have to add value to the flipped foreclosed home that we were selling by putting in composite decking boards and other cosmetic effects.
Cosmetic decking boards may look good. They may seem shallow to a lot of people but that’s precisely the point because by just increasing perceived value, even thru cosmetic means, you can go a long way in maximizing your return on effort.
If you want to make money through foreclosures, you need to cement the idea in the minds of potential buyers that they are getting maximum value for their hard earned dollars. Once you’re able to make that case, you can definitely get a lot more value for all the time, effort and energy you invest in flipping homes.
Otherwise, regardless of how great the property’s location is, it’s going to be very hard for you to make a good case as far as their dollars are concerned. You have to make this case. You have to give off the right signals.