3 Questions to Ask to Ensure that You Maximize your ROI
The goal for all investors is to maximize their ROI. Of course, it is always satisfying to see the transformation from an old distressed property to a new, modern, home. But, the overall objective is making a profit. While it can be very easy to get caught up in the projects and improvements of a flip, it is vital that investors carefully plan to ensure they do not over-improve. Believe it or not, losing your profit is actually very easy to do. This is because it can be hard to separate your personal design choices and “must-haves” from the minimum rehab that is actually needed to maximize your ROI. But don’t worry, ZINC is always here to help! When planning your exit strategy, there are a few vital questions to ask yourself to ensure that each decision you make adds enough value to your property’s ARV in order to increase your ROI.
- What are the minimum upgrades required to make your flip comparable to homes in the area? – This can get tricky because it is easy to go overboard when seeking a competitive edge. But, focusing on comps and carefully planning each upgrade can help alleviate the stress of over-improving.
- Are there any major issues, such as foundation, plumbing, HVAC, or any other very costly projects?- When a flip has major issues, like the ones listed, your ROI starts to quickly diminish. Asking yourself this question before purchasing a property is vital in order to make a solid profit on your flip.
- Does the as-is value of the property leave enough room for a profit? Calculating your ARV and outlining your exit strategy will help you determine if you are getting a good deal on your potential flip.
Before jumping into your next flip, start by outlining your exit strategy and asking yourself the questions listed above. Remember, ZINC is always here to help. If you are unsure whether or not your potential flip is a good investment, click here and use our FREE Deal Analyzer.