Times are changing and so are homebuyer’s needs. Trends show that more and more buyers are looking for houses that can accommodate two or more generations under one roof.
Baby-boomers are growing older, their children are less capable of financing their own homes, elderly care costs are skyrocketing and child care is not getting cheaper either. These are just a few reasons why the number of multi-generational households is growing everyday but the real-estate market is having problems keeping up. This opens opportunities for house flippers to fill the void and potentially increase ROI.
Satisfy the markets
Before you start planning any projects first understand your local market. There are lots of reasons why families decide to live together, these could differ from region to region, or even from one neighborhood to another.
A common motivation to move together is saving money.This again has different reasons that come with different expectations on the buyer’s side that you should consider. Who you target will make a big difference in how much and in what you should invest in.
- Stay-at-home kids – A growing reality, specifically among millenials, the kids just do not want to leave, or don’t make enough to stand on their own feet. In this case the parents are the buyers and want the house to be mainly built for their needs with a, preferably, separate section for the kid(s).
- Financial woes – A lot of young families lost their homes and credits in the previous financial crisis. This left some with no other choice than to move in with parents or other family. Usually in this case optimized space and practicality, for the cheapest price, is what the buyer is usually looking for. With a new crisis looming the demand can grow fast.
- Elderly care – It is no secret that the population is getting older and the elderly are living longer. Due to rising caretaking costs and stronger family bonds, more children prefer to take care of their aging parents or grandparents at home. In this case the expectations depend on which generation is the buyer. The older generation will want most of the house to accommodate their needs like ramps and lifts,whereas the younger generation would look for a reversible solution confined to a part of the ground floor, usually.
There is another common reason for multiple generations living under one roof and that is tradition, or heritage. Some people just love big families and having everyone around them, this is common in many cultures.
In this case it is more a matter of taste and spendable budget. Since most urban construction projects were not planned for larger families it might be challenging to find an appropriate real estate to refurbish. There are a few options to expand the living space in a house, some of the more obvious ones are building out the attic or garage. A lot of cities are adopting infill development, where you can build on unused space, like above a garage or an adjacent alley. This can increase your profit margin considerably.
Satisfy customer expectations
When getting a house ready for sale there is always the danger of over doing it, and not getting a return on your investment, or not doing enough and not making any real profit. It is important to do as much as necessary for as cheap as possible.
Walls and flooring
With a little creativity you can increase the perceived value of a house dramatically. Opting for different shades of color instead of plain white can bring you a higher price on the market, without any additional costs.
I personally am a fan of laminate flooring. The choice in price, design and quality is enormous, the installation so easy you can do it yourself, and the result always impresses. When it comes to multi-generation homes, the hygiene and durability of laminate flooring is a convincing selling point.
Kitchen and Bathrooms
The number and size of the bathrooms should depend on who you are targeting as a potential buyer. The wealthy retiree has different priorities than a large family on a budget. Nevertheless you can achieve wonders with a little taste and deliberate shopping. You can find taps and sinks similar to the high end designer products for a fraction of the price with a little research. When in doubt the internet can be a great source of inspiration.
The same goes for the kitchen, just keep an eye on the cost vs. resale value and use your imagination.
There are some things that add value to a house but not everyone is willing to pay for them. Investing in things like floor heating, an extra patio or even solar energy is risky for home flippers, there is always the chance that the buyer does not appreciate the perk enough to pay the price you want.
On the other hand there are extras that have a smaller demand but are hard to find. Accessibility is one of them, according to a 2010 census, 19 percent of Americans have a disability but few house flippers consider investing in accessibility features.
Some features are obviously for the disabled like a ramp or lowered cupboards, some are less obvious like broader doorways and some can be sold as luxury like a lift. This isn’t such a wild idea and can be realised in smaller buildings. I have seen a home elevator that only needs 40×30 inches room and no elevator pit. Families with disabled loved ones are not the only potential buyers, you will be surprised how many young people plan for their own old age and retirement when buying a house.
Home automation is another perk that in addition to boosting the real estate value is also a feature that can help the disabled. If you are going to rewire the house anyway then integrating home automation solutions could be an investment worth considering.
Flipping houses is growing in popularity and can be profitable if you avoid the pitfalls. If you are new to the business avoid loans, the interest rates can eat up your profit, or even worse, force you to sell without profit. When calculating expenses add a 20-30% worst-case-emergency buffer. If something can go wrong it usually does.
Last but not least, multi-generation houses are a niche worth considering, that can give you an edge over the competition, but it won’t work for every budget or every region.