When most people think of spec real estate, they think of flipping houses. But what is spec real estate, really? Spec real estate is any property that’s built or renovated without an immediate buyer in mind. The builder or developer “speculates” that they will be able to find a buyer – usually at a profit.
In some cases, the builder may even live in the property themselves for a while before selling it. These are known as “owner-occupied” spec homes. Of course, not all spec homes are created equal. Some are more likely to sell quickly to a cash property buyer and at a higher price than others.
In this article, we’ll take a look at what makes a successful spec home and how you can get started building your own.
Location, Location, Location
As with any real estate investment, location is key when it comes to spec homes. You want to build in an area that’s growing or has potential for growth. This could be a new development on the outskirts of town or a neighbourhood that’s gentrifying.
The Right Size
When it comes to spec homes, bigger isn’t always better. In fact, many builders find that smaller homes are easier to sell. This is especially true if you’re targeting first-time homebuyers or empty nesters.
Of course, the size of your home will also be determined by the lot you’re building on. If you have a large lot, you may be able to get away with a bigger home. But if you’re working with a smaller lot, you’ll need to downsize your plans accordingly.
The Right Features
When it comes to features, you want to strike a balance between trendy and timeless. In other words, you don’t want to build a home that looks dated as soon as it hits the market. But you also don’t want to build something so trendy that it will be out of style in a few years.
Some features, like hardwood floors and granite countertops, are always in demand. Others, like home automation systems, are more likely to appeal to early adopters. As you’re planning your spec home, think about which features will appeal to the widest range of buyers.
A Competitive Price Point
When pricing your spec home, you need to strike a balance between making a profit and attracting buyers. If you price your home too high, it may sit on the market for months or even years. But if you price it too low, you could end up leaving money on the table.
To find the right price point for your spec home, do some research on comparable properties in the area. This will give you a good idea of what buyers are willing to pay – and how much competition you’re up against.
A Solid Marketing Plan
Once your spec home is complete, it’s time to start marketing it to potential buyers. This can be a challenge if you don’t have any experience in real estate marketing. Fortunately, there are plenty of resources available to help you get started.
There You Have It
Building a successful spec home is all about planning and execution. But if you do it right, you could end up with a lucrative investment – and a beautiful new home to show for it.
Image Credits: James McCreddie