There is often a direct correlation between the state of the real estate market and the value of renovations.
- In a declining market, real estate investors must watch out for the type of renovations that are being done. You may be dumping a lump sum of money into your renovations and not be able to see the returns that you were bargaining for.
- In a market that is appreciating, the value of the renovations help boost the value of the end product. Ultimately, when the market goes up, so too does the value of your renovation.
Many people may think they are “flipping gurus” in an appreciating market, but it’s like what Warren Buffet says: “A rising tide floats all boats, but it’s only when the tide goes out do you discover who’s been swimming naked.”
Given the state of the current real estate market and economy as a whole, you must be smart with your renovations right now, especially since material and labour costs have not gone down relative to property values. All things considered, it would be safer at the moment to hold off on carrying out any renovations for flipping or BRRR-ing because you do not have the rising tide of an appreciating market.
Value-driven investing makes the most sense right now – that is, assets that produce income from day one. In the world of real estate investing, this would mean investing in turnkey properties.
Despite the higher interest rates, it is still possible to find cash flowing properties right now. If you want to know where our clients have been purchasing their real estate investments these days, then be sure to book a strategy call with me today.