When you put your home on the market, more often than not, you’ll make the most profit by selling to a traditional homebuyer. But this isn’t always the case. If you’re considering selling, you should think about how attractive your property might be to an investor.
Investors evaluate property using different criteria than homeowners. As Chris Romany, a Realtor with House Solutions in Orlando, Florida explains, “Investors typically buy homes to do one of two things: fix it up and sell it, or they’ll buy and hold it to let the capital appreciation increase, and in the meantime, rent it out.”
Given these scenarios, here is what you can do to increase the market value of a home and make it more attractive to investors:
- Get Rent. If you haven’t already, actually rent your home out. See how much rent you can get. If you can show that your home commands high rental rates, it’s that much more attractive as an investment property.
- Show Expenses. The flip side to income (i.e. rent) is expenses. If you can provide a few years of expense history along with actual income, investors understand the business of the property. They can track monies coming in and going out and evaluate what the property is worth to them.
- Repair for Renters. Going back to the first point, in order to achieve the highest rental rate possible, you want to make your home as enticing to renters as possible. As Romany points out, you want to make it so they can walk in without any issues – for example, no plumbing or AC issues. What’s more, fixing up the kitchen and bathroom, or even improving the front of your home, can make the difference in getting a higher rent, and keeping renters year after year.
- Repair for Investors. Investors also want a turnkey property so it’s wise to take care of necessary repairs so they won’t have to spend lots of money fixing up the property. Al Baydoun, Investment Director of Detroit’s US Investor Group, explains: “One of the main things that affects their return on investment is maintenance and repairs. Instead of making costly cosmetic improvements to your home, the best way to make it appeal to investors is to improve the mechanical systems like HVAC, installing new electrical panel, or new plumbing. Homes with newer mechanical systems require less maintenance, thus helping the investor’s bottom line.”
In some markets, rents are growing at a faster rate than home values. If you live in one of these areas, it’s smart to value your home both ways, as it just might be worth more to an investor. This is particularly true if investors have bought several homes or properties in your vicinity, as is currently the case in markets like Orlando, Detroit and Houston. These are signs that the market value of a home may be higher in the eyes of investors.
You can use APV’s Home Rental Value tool to help determine what factors might increase your home’s value to investors.
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