Honolulu (KHON2) – Kay Mukaigawa of Engel & Volkers Honolulu shares her thoughts on the Reverse 1031 Exchanges and the strategies to use current investment properties to buy another investment property.
According to Mukaigawa, the idea of buying a property, renovating it and then selling it for a profit sounds exciting, but there needs to be some serious thought put into doing a Fix and Flip project.
“It can be exciting and profitable to participate in a “fix and flip.” You need to keep your eyes and ears open for good opportunities, make good decisions on your purchase price, on what you renovate, and be sure to consider ALL costs, including the not-so-obvious costs I mentioned earlier,” says Kay Mukaigawa, Engel & Volkers of Honolulu.
Tips to consider for your project to run smoothly and most important, be profitable:
1) When calculating your expenses, be sure to include the waiting period costs, including carrying costs of any mortgage, property taxes, insurance and maintenance fees. Often overlooked are the exit costs: Commissions, escrow fees and other closing costs.
2) If you are selling property in a condominium, be sure you have all proper approvals before you begin your work. As an example, an association may have strict rules about installing laminate flooring and the way the floor needs to be prepared.
3) When doing plumbing or electrical work, be sure you use licensed labor. And some associations even require flooring contractors to be licensed.
4) Order your appliances early. The wait time for appliances can be months and if possible, select items that are in stock.
5) Consider renovation items that present your property in its best light. You will likely need to do more than just paint and change the flooring. Look into new lighting, fixtures, cabinets and counters. And consider having your property professionally staged before listing it for sale.
6) Most of all, know the market. Be sure you are realistic about your exit sales price, as carrying costs can quickly erode your profit.
Those looking to learn more about the current real-estate market can do so by attending an Engel & Volkers Honolulu Saturday seminar, and reach out via email or phone.
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Segment Paid For by: Engel & Volkers Honolulu