Properties that Probably Won’t Turn a Profit from Renovation

There is an important thing to consider before you jump out and buy that first property to turn a profit on. You need to make sure to invest in a property that you will actually make money by renovating because there are certain types of properties that you will almost never make a return on.

One of these is a home located in a neighborhood where all the houses are based on a very similar design. If you choose to renovate one of these, you just might take out of character from the other houses surrounding it, causing it to loose its appeal to prospective buyers. This is especially true of exterior modifications with this kind of house.

Another type of home that you should not put a lot of renovation into is a simple one where overly renovating could cause the home to be too valuable in comparison to the houses around it. This is called a “White Elephant” in the business. Making that home the nicest on the block could backfire and actually cause you to lose money in the long run by not being able to sell it when the time comes. Be sure to check out the property values in the area surrounding a property you’re interested in first. You will only be able to modify that property as much as the neighborhood will dictate. Remember that you want to buy the worst house in the best neighborhood. Also remember that if you build a white elephant, a perspective buyer will have a problem in getting financing and as a result you will have a very hard time selling the best house in the neighborhood.

Also, you should not bother renovating a home that you know has a bad history or does not pass home inspection due to a large number of problems or several major problems.  You will end up sinking way too much money into making it presentable to a buyer and the chances of recouping that money on a potential sale is slim.

Keep these things in mind when you are out there looking for that house to flip because the objective of flipping is to make a good return. Therefore, it is advisable to stay away from the types of properties that won’t benefit from some value-enhancing renovations.

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  1. Jeraldine Franklin says:

    Yes I would to buy one those properties if I only had the money.

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