Successfully completing a fix and flip investment project can be tough. Finding the right property, securing financing, partnering with the right contractor, figuring out renovation and design plans, researching comps, enhancing curb appeal ... it's a lot to handle, and that only scratches the surface.
We recently chatted with Mark Ferguson of Invest Four More about curb appeal specifically. Read on for his insights on what makes great curb appeal and how much you should be spending on your fix and flip's exterior.
How important is curb appeal when selling a completed fix and flip?
Curb appeal is important, but how important depends on the house and the market. In Colorado we have a very strong seller's market. In certain price ranges, buyers are happy to get a house that is decent. The houses do not have to be perfect to sell. In higher price ranges more work needs to be done on the curb appeal to get the houses to sell. When we flip houses, we often spend little money on the landscaping. We do this because many buyers feel they can do landscaping work themselves, whereas they are not keen to replace kitchens, baths, etc.
We also have to think about the cost of repairs. Many people assume landscaping is cheap. Just throw some sod down and you are done. However, this can vary by market as well. We have to put sprinkler systems in our properties in Colorado and there are only certain times of the year we can put sod in or it will die. In the winter we have to leave the grass as is. When you are putting in a sprinkler system, sod, and other landscaping, it can cost over $10,000. In most cases you are not going to get that money back from an increased sales price for a nice yard.
We do make sure the house itself looks nice with new paint if needed, new windows, roof, etc.
What are the key elements of great curb appeal?
I think first you need to make the house look nice, as that is what most people care about. As I mentioned, new paint if needed, new windows, a roof, shutters, etc. Green grass always helps, but again is not necessary. I know people can go crazy with shrubs, and trees, and flowers. All those costs add up, as well as the time it takes to complete them. I think grass and some mulch is usually good enough and the shrubs, trees, flowers, are nice, but generally not needed.
What are the exterior trends that homebuyers want most?
This is very market specific. In the southwest, homebuyers might want zero scape with rocks, and not grass. Other areas want grass. It can even vary based on the neighborhood. This is where the investor needs to do their homework to find what is needed in their market.
How much of your fix and flip budget should go to exterior elements?
I think this all depends on the house. On average I would say that 10 to 20 percent would go to the exterior.
When looking at a potential investment property, what exterior red flags should fix and flippers be wary of?
Some things to look at would be structural issues. Does the house have gutters? If not, there could be water hurting the foundation. Does the grading slope into the house or away from the house? Is there wood rot, settling, cracks in bricks, etc. Most everything can be fixed, but structural and foundation issues can be very expensive.
Any other advice for fix and flippers looking to improve curb appeal on their project?
Again, know your market. And be wary of the time and money you are spending on the exterior.