When it comes to selling a flipped home, the key is to know your buyer. Many new real estate investors ask, “How has the fix/flip industry changed?” In the past, investors bought zombie foreclosures homes, easily snapping up a deal from the vast inventory. Today, inventory is tight. Meet the typical buyer. He or she has owned one or several homes before. Second-wave boomer (born between 1956 and 1964) buy starter type homes for retirement, as rental properties to add to their retirement income stream or to help their struggling millennial adult child. When fixing up a home to sell for a profit within a short time frame, consider the different home preferences of second-wave boomers. According to an article by realtormag.com, recent studies show younger baby boomers care most about location, price and floor plan. Young boomers are most interested in the kitchen, master bedroom and great room. In fact, The Farnsworth Group conducted a study that showed 82 percent said the kitchen is the most important room. As a real estate investor, focus remodeling dollars on the three important zones.
Buying in the right location
While some studies indicate it’s better to own a home, other statistics show renters come out ahead. As a home flipper, you make money whether you sell to a first-time home buyer, retirees or landlord. Aspiring landlords want to attract second-wave baby boomers, which makes location important. Retirees want to live close to shopping, hospitals, dining and amenities. When searching for a home to flip for a profit, consider those inside 55 and older master-planned communities as well as those in hot neighborhoods.
Giving the kitchen a major update
If you want to make more money on a home flip, it pays to attract home buyers with more money. Older buyers often sell their previous homes to help pay for a renovated property. While a first-time buyer does not mind a peel-and-stick backsplash, a baby boomer buyer will likely expect a more professional glass or tile backsplash in the kitchen. For a better return on a flip, upgrade the countertops and add a kitchen island. Even if they don't plan to live in the home themselves, they don't like tacky interior finishes.
Creating privacy with less maintenance
Although older buyers want a low-maintenance home, they also like privacy. Some ways to improve security and privacy include a privacy fence, native plants for landscaping and good lighting. Before choosing a home to flip, check out the neighborhood. To save money, choose a home on a lot that already includes mature trees and a fence if possible. It costs less money to paint an older fence than to replace it. Also, think about indoor-outdoor spaces for entertaining and relaxation.
Making the home more accessible
Second-wave boomers want to buy a home where they can easily age in place. For an investor flipping a home, that means creating ample hallway and doorway space, positioning cabinets within easy reach and using non-slip surfaces. Although they might feel fed up with their grown adult children living at home, most second-wave baby boomers want flexible space for visitors and relatives who come to stay. Split floor plans often accommodate multi-generational households better.
The home flipping industry and real estate trends shifted as older baby boomers settled into their retirement homes and younger buyers dominated the rental home market. Because people of all ages continue to rent, it makes sense to flip a home with the landlord/investor in mind. Many DIY landlords hope to find a rent-ready home they can immediately turn into an income-generating property. Some of the best rental properties are starter or entry-level homes with about 1,500 to 2,000 square feet. Expect to compete with first-time home buyers when bidding on these homes when they come up for sale.
At Center Street Lending, we give real estate investors the funding they need to quickly get started renovating an investment property. Talk to us about financing for the home itself as well as anticipated repairs and renovations. For more tips on selling to the second-wave boomer and information on how the fix/flip industry changed in states such as California, Arizona, Colorado, Washington, Texas, Florida, Tennessee, Virginia, Maryland, North Carolina, or Washington DC, please contact us.
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