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November 1, 2022

12 Tips for Building and Selling Investment Properties

12 Tips for Building and Selling Investment Properties

Dealing with investment properties differs from building and selling traditional real estate like your own home. The process includes considering your building costs, figuring out the earnings from the selling price, and making sure the entire venture will be profitable. There will also be time constraints and a building schedule. You will have to coordinate with contractors, builders, and retailers for your materials.
Of course, real estate investing can be very rewarding, with a gorgeous investment property as the end result. Real estate almost always appreciates in value, and you’ll get the return on investment in a timely manner. Before you get started, read below for Stilla Raissi’s 12 expert tips for building and selling investment properties.

Study the local housing market

The first step to smart and savvy real estate investing is to study the local housing market. Understanding occupancy versus vacancy rates and employment data is essential and will factor into how quickly and easily you’ll be able to make a profit on the property. After all, buyers will want to know if they’ll be able to easily rent out the property to tenants. Your expert agent will advise you on the nuances of the local market and help you determine which communities may be the most profitable.
You also need to research whether there are any other new developments planned in the area, as an increase in inventory of new homes means your property will be competing for tenants. Knowing the overall status of the local real estate market is vital to selling investment properties—look to your agent’s expertise for guidance in making wise investments in a particular area.

Estimate your construction costs

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It’s essential that you prepare a budget for construction. You can research the cost of labor and materials, which is usually about a 50/50 ratio. The price of materials fluctuates, however, mainly depending on the type of materials you plan to use and the finishing touches you choose for the property.
When it comes to financing, most banks will demand a definite cost and budget from a general contractor before considering you for an investment loan. Plan to keep your costs low (without sacrificing quality).

Don’t invest too much upfront

One of the biggest mistakes people make is investing too much. You can negotiate to pay the contractors half of the money upfront and the other half upon completion. If you pay for everything upfront before the job is completed, you risk losing control over the construction because they already have all your money.

Keep maintenance costs low

You also need to attempt to keep your maintenance and monthly operational costs low. Investment property with low maintenance and operational costs will allow the owners to maximize their return on investment or income potential. The higher the ROI or potential income, the more attractive the property will be to potential buyers. If operational costs are too high, it might be a good idea to delay putting the property on the market until you can lower those costs.

Determine an appropriate listing price

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In the real estate market, pricing is key to selling your property quickly and effectively. Sometimes you have to decide between a higher selling price or achieving a faster selling time. 
With an investment property, it’s typically advisable to attempt to sell it faster so you can avoid additional maintenance costs over time. Of course, you must also find the correct price to appeal to buyers. Pricing investment property is more complicated than standard real estate sales. The amount should fall somewhere between being too expensive and slightly undervalued.

Stage the property

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Prospective buyers of investment properties are usually not the ones who will be living in them. Because of this, you may feel that staging the property is not an essential step before selling. However, the property still needs to look appealing. Prospective buyers will be thinking of their future tenants and how the property will look to them. Being able to picture the property as a home will go a long way in convincing them that the property can be rented out quickly.

Hire a professional photographer

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Hiring a professional photographer and providing high-quality photos to accompany your property listing will drum up more interest from prospective buyers. Professional photographs are more likely to invite buyers to click through the listing, read the property description, and schedule an in-person showing if they feel it matches their criteria.

Write excellent ad copy

High-quality and well-written advertisements are also necessary. Prospective buyers want detailed information on properties they’re investing in. Compelling and thorough marketing copy can make your real estate listing stand out from the sea of other listings. It will help generate more leads and more interest in the property.

Create a virtual tour online

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According to the National Association of Realtors, the majority of prospective buyers search and do their research for homes online. Especially since the start of the pandemic, more people have searched through properties virtually, and they often expect to see virtual tours and walkthroughs that showcase each space of your home.
A virtual tour can give potential buyers an up-close look at all the rooms and spaces within the property. With a 3D walkthrough, prospective buyers can navigate the space on their own and envision themselves within each room. This may entice them to make an appointment for a tour.

Schedule multiple showings

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The initial two weeks your property is on the market tend to generate the most interest. Buyers keep themselves up to date on the newest listings in hopes of scooping up a good deal. Scheduling multiple listings can show prospective buyers that there’s a lot of interest in the property. Make sure to have back-to-back showings so buyers can see there may be competition from other buyers. The hope is that they’ll be more likely to put in an immediate offer in an attempt to beat out other prospective buyers.

Increase marketing and exposure

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Marketing increases your exposure, so it’s essential to list and advertise your property on as many platforms as possible. Set up a yard sign outdoors with the contact information for your property. You can also prepare informational pamphlets that you can distribute throughout the community. The more people who are aware that you have an investment property for sale, the better for increasing exposure. It means the property will garner more and more interest.

Hire an experienced real estate agent

If you are interested in investment properties, look no further than Stilla Raissi. She’s a premier Los Gatos Realtor® with over a decade of experience handling luxury property sales and complex, off-market transactions. With a creative problem-solving approach and a success-oriented mindset, Stilla is the expert you want on your team, whether you’re looking into properties in Los Gatos, Saratoga luxury homes, or Monte Sereno real estate. Reach out to her today!

*Header photo courtesy of Stilla Raissi

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She has a solid mastery of the performance of volatile markets, pricing strategy, and negotiation, amassed from over fifteen years experience in the mortgage lending and real estate industries.

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