OPERATIONS: DESIGN BUDGETING
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Budgeting for a Fix-and-Flip Home Design CREATING AND MANAGING A BUDGET FOR YOUR FIX-AND-FLIP REAL ESTATE INVESTMENT HOME DESIGN IS CRUCIAL FOR MAXIMIZING YOUR RETURN ON INVESTMENT.
JOHN V. SANTILLI
B uying a property, renovating it, and selling it for a profit is an exciting venture. But without careful financial planning, you could quickly lose money instead of making it. That’s where creating and managing a budget for your fix-and-flip real estate investment project becomes crucial, especially when it comes to the design phase Having a well-thought-out design budget is essential when renovating a property for resale. It helps you stay organized, manage costs, and achieve the desired aesthetic appeal without overspending. With a budget, you may avoid making impulsive decisions or going overboard with expensive design
elements that can affect potential profits. If you plan to rent the property out rather than resell it, remember that cheap but durable is the way to go. A design budget allows you to allocate funds for different aspects of the renovation (i.e., materials, labor, appliances, and fixtures). It helps you prioritize and make informed decisions about how to spend your money. A budget allows you to track expenses and ensure you stay within your financial limits throughout the project. Whether your plan is fix-and- flip or BRRRR, stick to the budget. It’s important to consider the entire project budget before establishing a
design budget. These costs include the cost of buying the property, agent commissions, and property taxes. You also must consider financing, utilities, and other required taxes. Also ensure you have considered the selling costs (e.g., realtor fees).
COMPONENTS OF A DESIGN BUDGET
Before creating a design budget, it’s essen- tial to understand its components. They will vary, depending on the project’s scope, but some common elements include: ▷ MATERIALS: Construction materials
such as flooring, paint, tiles, cabinets, and countertops
70 | think realty magazine :: may - june 2024
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