Maximizing ROI: The Art of Presale Renovations for Real Estate Investors

One of the hottest ways to attract real estate investors in today's market is using a presale renovation to help maximize property value or to turn an as-is listing into a ready-to-rent home.

Often, presale renovations are used for luxury properties because they quickly accelerate the property's value to help sellers maximize their profits. But presale renovations can work with a wide range of property prices and sizes.

Real estate investors looking to sell one of their properties are the perfect candidates for using a presale renovation solution.

Moreover, real estate investors may be especially attracted to single-family home listings that have gone through a presale renovation because it accelerates their ability to rent and manage their investment — which, over time, maximizes their ROI, or return on investment.

The alternative is both scary and risky. Real estate investors looking to self-flip a home will find limited inventory in most markets. In addition, self-flipping also increases their risks, delays the start of their rental income stream, and requires tying up significant financial resources that may be better used elsewhere.

It's why most real estate investors today are attracted to homes that are sold ready to rent and why they see presale renovations for their own property sales as no-brainers.

Presale renovation protection

Investors know from industry research that while typical renovations will help increase a home’s value, most won’t recoup their investment costs, according to Remodeling Magazine’s 2022 Cost vs. Value Report.

But when using a presale renovation expert, such as Revive, the renovation is covered by the increase in value of the investment, or the property itself. The average ROI from Revive is 2.5x the original cost of the upgrades. This is where the "art of presale" renovation creates the right math.

At Revive, the focus is on making improvements that will maximize the home's value. The expertise gained through hundreds of improvement projects nationwide enables Revive to focus only on projects that will create a positive ROI.

For the selling real estate investor, it means higher final sales prices than if they marketed their property as-is. Real estate investors buying a property are protected from all the financial, supply, contracting, design, engineering, and other risks that a self-renovation can bring.

When a real estate investor buys a home that has completed a presale renovation, they purchase a home that they are confident will have staying power. When buying a place that has gone through a presale renovation by Revive, real estate investors know the high quality of the finished product.

What you need to know

Here are three things you need to know as a real estate agent to tap into the real estate investor market:

1. Know your sphere

Most successful real estate agents get the majority of their business from their sphere of influence, or SOI. According to the National Association of Realtors, agents earning more than $100,000 annually generate 64 percent of their business from the SOI. About 30 percent of their business comes from client referrals and 34 percent from repeat business.

Dig into your client database. Comb through your transactions and look for clients who you know either currently own an investment property or are poised to discuss investment diversification and the advantages of real estate investment.

As part of your regular client and sphere outreach, offer information about the opportunities in today’s market for real estate investment.

Don't forget to contact investment advisors, trust and real estate attorneys, insurance agents, and others who provide financial advice. Let them know about the real estate services you offer for real estate investors.

Finally, look for local real estate investor clubs, Facebook Groups, and other social online networking opportunities to connect you to others interested in real estate investment.

2. Know your market

U.S. Census data shows there are about 20 million rental properties in the U.S. and 48.2 million rental units. Individual investors own some 70 percent of all rental properties.

While companies own about 18 percent of rental properties, they invest heavily in apartment rentals, owning 45 percent of all units.

Most real estate investment purchases are all cash. Three-quarters (75.3 percent) of investment properties were purchased with cash in the fourth quarter of 2021. Today, more than 40 percent of all renters live in single-family homes.

In June 2022, Zillow reported that the average national monthly rent surpassed $2,000.

3. Know your audience

Successfully marketing to any specific population segment — like real estate investors — requires understanding the audience you are trying to reach.

According to industry research by Zippia, the average age of a real estate investor is 40+ years old. That's 71 percent of the population. While most real estate investors are men (68 percent), the number of women real estate investors is growing rapidly, from 26.53 percent in 2015 to 31.5 percent in 2021.

Real estate investors are well educated: 89 percent have a college degree, with 73 percent holding a bachelor's or master's degree. In addition, 63 percent have at least five years of experience investing in real estate, and one in three have 11 years or more experience.

Have the talk

In your conversations with real estate investors, have the presale renovation talk. It works well for real estate investors who want to sell a property and those who are looking to buy a home that just underwent a renovation by a company like Revive.

And remember that not all presale renovation firms are equal. Take time to do your research and look at their process and track records. Do they disclose all the financial details of their work product — like this? Do they report their average ROI? The average profits gained?

To learn more about presale renovation services and opportunities available in your area, check out Revive at www.revive.realestate. We love talking to real estate professionals about how to unlock inventory and maximize profit!

Michael Alladawi, CEO and Founder of Revive, is a Southern California real estate veteran with a proven track record as a builder, investor, and respected home flipper. Michael created Revive to share his spectrum of knowledge and help homeowners maximize their profits when selling their homes. Learn more about Michael and Revive at www.revive.realestate.com.