Real estate investing is one of the top ways to expand personal income while revitalizing neighborhoods and urban dwellings. The biggest question for builders and investment newcomers is “what makes a good investment property?” The answer remains nuanced and depends on various circumstances throughout the investment process.
In this article, we’ll discuss key indicators to help identify lucrative locations and properties, along with renovations that will help your property stand out among the competition.
In this article, we’ll discuss key indicators to help identify lucrative locations and properties, along with renovations that will help your property stand out among the competition.
Identifying Profitable Investment Markets & Properties
Whether you are a long- or short-term investor, identifying profitable markets to invest in is essential to success.
Market Research
An investment property’s location significantly influences its value, demand, and ROI potential. Luckily, real estate market research is not overly difficult, with most of the necessary information readily available online. In general, good investment properties lie within areas with:
An investment property’s location significantly influences its value, demand, and ROI potential. Luckily, real estate market research is not overly difficult, with most of the necessary information readily available online. In general, good investment properties lie within areas with:
- Bustling job markets: Visit the U.S. Bureau of Labor Statistics for insights.
- Residential growth: Visit the U.S. Census Bureau for more information.
- Housing affordability: Visit real estate marketplace research websites like Zillow.
- Low unemployment rates: Visit local city economic development or job market websites like Indeed.
By performing the legwork to research and identify profitable markets, you position yourself to find homes with high ROI potential. If you are a builder or investor looking to take advantage of expanding urbanization projects, market research will help identify some of the top cities top build in.
Analyzing a Home’s ROI Potential
Once you have identified profitable markets, it’s important to make a fix and flip or rental investment strategy that includes answers to the questions:
How much are you willing to invest?
This includes all project costs, including a property’s purchase price, purchase costs, renovation expenses, and any sales and holding costs. A general rule of thumb in property investments for beginners is to set aside an additional lump sum for unexpected expenses–typically between $5,000 and $20,000.
What is the minimum profit you are willing to achieve?
It’s smart to have a minimum profit in mind while researching properties. Setting a hardline profit margin simplifies decision-making when deciding whether an investment is worthwhile. On average, fix and flip investors aim for a minimum profit margin between $15,000 and $20,000.
What is the minimum return on investment (ROI) you are looking for?
What makes a good rental property or home flipping investment? A property with high ROI potential. What is a good return on an investment property? While that number can vary, most investors look to achieve at least a 20% return on investment.
Fortunately, several property analysis formulas can help you determine the estimated costs of any potential investment’s overall expenditures, profit, and ROI potential. Proper planning, research, and these property analysis formulas are how to know if an investment property is good. You’ll want to take all of this into account before purchasing an investment property, which will help you avoid a financial catastrophe.
While market research helps identify where and what to look for when buying a property, property research and analysis help you compare different investments, grade properties, and determine the best investment opportunity for your business.
How much are you willing to invest?
This includes all project costs, including a property’s purchase price, purchase costs, renovation expenses, and any sales and holding costs. A general rule of thumb in property investments for beginners is to set aside an additional lump sum for unexpected expenses–typically between $5,000 and $20,000.
What is the minimum profit you are willing to achieve?
It’s smart to have a minimum profit in mind while researching properties. Setting a hardline profit margin simplifies decision-making when deciding whether an investment is worthwhile. On average, fix and flip investors aim for a minimum profit margin between $15,000 and $20,000.
What is the minimum return on investment (ROI) you are looking for?
What makes a good rental property or home flipping investment? A property with high ROI potential. What is a good return on an investment property? While that number can vary, most investors look to achieve at least a 20% return on investment.
Fortunately, several property analysis formulas can help you determine the estimated costs of any potential investment’s overall expenditures, profit, and ROI potential. Proper planning, research, and these property analysis formulas are how to know if an investment property is good. You’ll want to take all of this into account before purchasing an investment property, which will help you avoid a financial catastrophe.
While market research helps identify where and what to look for when buying a property, property research and analysis help you compare different investments, grade properties, and determine the best investment opportunity for your business.
Making your Investment Property Stand Out
Too often, inexperienced fix and flip investors or builders focus on differentiating a home or rental property. While standing out is a goal, a complete disregard for uniformity within a neighborhood or urban dwelling can actually hurt a property’s appeal.
In reality, the right amount of conformity, along with some selective renovations, is what makes a good investment property. Maintaining semblance with things like architectural design and color schemes will create a sense of unity with the property’s surroundings and ensure you aren’t minimizing your target demographics.
With that, let’s look at some of the top affordable interior and exterior home renovations that will skyrocket your property’s resale value and overall appeal:
Updated Color Schemes
As mentioned, straying too far from the norm can make your property stand out negatively and reduce your target pool. Neutral colors tend to remain the go-to colors for resale investors. However, a recent Zillow paint color analysis indicates that dark grays have become trendy for both interior and exterior designs among today’s homebuyers.
Darker grays, like charcoal gray, in the kitchen have sold for an estimated $2,512 more than similar homes. A cooler gray like Stormy brings a modern feel to your living room while increasing offers by as much as $1,755.
However, there is such a thing as too much gray. For bathrooms or hallways, implement lighter earthy tones, like terra-cotta brown–2023’s color of the year–to enhance resale values by more than $1,600.
Enhance the Landscape
Curb appeal is often the first selling point for homebuyers and renters, and nothing enhances the aesthetics of a home’s exterior more than great landscaping. Landscaping projects can add character to your property while increasing its resale value by up to 12%. Best of all, many landscaping tasks are DIY-friendly–helping you save money and increasing your property’s ROI potential.
Some of the top DIY landscaping projects include:
To further boost your property’s exterior appeal to today’s homebuyers, focus on sustainability and safety. You can look to improve the privacy and greenery of the home by planting new trees or enhancing its security with landscape lighting.
Eco-Friendly Additions
Sometimes, it’s less about what to know before buying an investment property than who you know. Specifically, your target consumers. Although there are several demographic shifts among today’s latest homebuyers, sustainability remains critical to consumers. In fact, sixty-six percent of today’s eco-conscious consumers consider a home’s sustainability during the purchasing process.
Eco-friendly home improvements continue to attract and push consumers over the finish line. Some of the top green additions include:
If you are renovating on a budget, some cost-effective eco renovations to catch consumers’ eyes include the addition of Smart thermostats, HEMS, LED Smart lighting, and Smart window shades.
In reality, the right amount of conformity, along with some selective renovations, is what makes a good investment property. Maintaining semblance with things like architectural design and color schemes will create a sense of unity with the property’s surroundings and ensure you aren’t minimizing your target demographics.
With that, let’s look at some of the top affordable interior and exterior home renovations that will skyrocket your property’s resale value and overall appeal:
Updated Color Schemes
As mentioned, straying too far from the norm can make your property stand out negatively and reduce your target pool. Neutral colors tend to remain the go-to colors for resale investors. However, a recent Zillow paint color analysis indicates that dark grays have become trendy for both interior and exterior designs among today’s homebuyers.
Darker grays, like charcoal gray, in the kitchen have sold for an estimated $2,512 more than similar homes. A cooler gray like Stormy brings a modern feel to your living room while increasing offers by as much as $1,755.
However, there is such a thing as too much gray. For bathrooms or hallways, implement lighter earthy tones, like terra-cotta brown–2023’s color of the year–to enhance resale values by more than $1,600.
Enhance the Landscape
Curb appeal is often the first selling point for homebuyers and renters, and nothing enhances the aesthetics of a home’s exterior more than great landscaping. Landscaping projects can add character to your property while increasing its resale value by up to 12%. Best of all, many landscaping tasks are DIY-friendly–helping you save money and increasing your property’s ROI potential.
Some of the top DIY landscaping projects include:
- Lawn mowing
- Mulching
- Weeding
- Shrub and tree trimming
- Pressure washing
To further boost your property’s exterior appeal to today’s homebuyers, focus on sustainability and safety. You can look to improve the privacy and greenery of the home by planting new trees or enhancing its security with landscape lighting.
Eco-Friendly Additions
Sometimes, it’s less about what to know before buying an investment property than who you know. Specifically, your target consumers. Although there are several demographic shifts among today’s latest homebuyers, sustainability remains critical to consumers. In fact, sixty-six percent of today’s eco-conscious consumers consider a home’s sustainability during the purchasing process.
Eco-friendly home improvements continue to attract and push consumers over the finish line. Some of the top green additions include:
- Solar panels
- Tankless water heaters
- Weeding
- Energy Star appliances
- Energy-efficient windows and doors
If you are renovating on a budget, some cost-effective eco renovations to catch consumers’ eyes include the addition of Smart thermostats, HEMS, LED Smart lighting, and Smart window shades.
CIVIC: Your Investment Property Capital Partner
One of the best ways to ensure that your property stands out is to make sure you have adequate capital for your project. For property investment beginners, adequate financing is as important as understanding what makes a good investment portfolio. CIVIC offers the most reliable and flexible financing options on the market.
We provide:
With the right tools and financing, our investment experts can show you what makes a good investment property and help you purchase, build, and renovate each to amass high-ROI results.
Ready to make the most of your real estate investment by working with the number one capital provider on the market? CLICK HERE to get started today!
We provide:
- Fix and Flip Loans
- Ground Up Financing
- Stabilized Bridge Loans
- Rental and Rental Portfolio Loan Options
With the right tools and financing, our investment experts can show you what makes a good investment property and help you purchase, build, and renovate each to amass high-ROI results.
Ready to make the most of your real estate investment by working with the number one capital provider on the market? CLICK HERE to get started today!