18
Home Improvement And The Real Estate Investor
Posted by katie George on December 18, 2008
Investing in real estate can be a very lucrative investment if it is done properly. Whether you are investing in a brand new home or an old fixer upper, all houses will gain value if you spend the necessary time and money making sure that the property is maintained. Some people may feel that improving the home is not required since they are only going to sell it anyway, but that line of thought will cost you money in the end. Your investment will gain tremendous value if you are willing to repair and remodel whatever is needed before you sell the investment property.
Some real estate investments may only need a little spring cleaning and a few minor repairs, while other investments may need to be completely redone. Properties that need more work usually cost less to purchase because of the amount and the extent of the work needed. Even properties that need a lot of repairs and renovations can be terrific investments, because their value increases significantly more than the cost of the repairs and home improvements.
Most real estate investors do not realize the importance of making home improvements. Even simple things like painting the walls or weeding the lawn and putting down a good grass seed can raise the value of your investment. You can ask for and get a much higher price for real estate if everything is in great condition. Even houses that are in good repair should be thoroughly cleaned from the top to bottom, including gutters and eaves troughs. When you are considering a property to invest in, it is a good idea to do a very detailed inspection to evaluate all repairs that need to be addressed, whether they are minor or major.
It is important that you keep all receipts for any labor and materials you purchase to repair and improve your real estate investment. When you get ready to sell your investment you will have a record of all the money you have invested in home improvement for the real estate. This will allow you to show an increased value of the home due to the home improvement. It will also enable you to sell your real estate investment faster for a larger price. In a buyer’s market, the repairs and maintenance of your property may be one of the biggest sellers. No one wants to buy a home to live in and then have to take the time and money to do a lot of maintenance or repairs.
Home improvement is very important to real estate, whether you are just trying to flip a house to make a profit or you have rental property with tenants. By improving the property you will greatly improve the profit you will make from your real estate investment. A lot of real estate investors do not think about home improvement, and it costs them in the form of lower sales prices and lower monthly rents.
This is really timely, because I own a flat for investment purposes too and I am considering selling it, as I’ll need the money for something else. My concern is only that in the last years the condition of the flat has deteriorated quite a lot, but I’m not sure if I can recoup any investments I’d put into the improvement, because the sales prices are falling in my area. Tough question, isn’t it?
I totally agree with your article Katie.
Especially in the current depressed market, renovating can be one way to force values up when they would otherwise remain in the doldrums.
Of course the strong caveat is not to over capitalise for precisely the same reason i.e. because a lacklustre market will amplify and compound any mistakes you make
Great post, I’m noticing it’s getting more difficult to decide how much to spend on a house in todays market. Is it worth ripping out laminate just to add hardwood floors in hopes to increase the price or attract the right buyer?
happy new year..!!
Improving your home in the right ways can absolutely improve the value of yoru home. Be careful, some improvements don’t add value. Look at comps in the area to see what has been done to similar homes and improved their values. New kitchens with granite countertops, adding a pool, hardwood floors and other improvements can add to the value. Talk to a local realtor and ask for their opinion, it never hurts to check with a professional.
I’ve just discovered your blog and there is heaps of good info that I’ll be reading my way through! I’m hoping to invest in real estate later this year (in Australia) and planning on leasing business offices to professionals. Do you have any posts specifically on investing in business rentals for a first time investor?
Very timely. But for the economic now, doing home improvements can “hold” the much needed cash. Rather settling to sell homes as it-is (is the trend) just to get that much needed cash.
It is very important to do the work ASAP. Renters will appreciate it too! If it looks like something when they move in they will be more likely to treat it like there own.
I guess the statement you make is true that “all houses will gain value”, however, the people in California may not all feel that way right now!! Personally, I feel there are better places than others to invest in Real Estate. Having my family here since the 1870’s, I feel the Austin, Texas Metro Area is one of the best in my opinion.
Nice post, I wonder how to buy the foreclosed homes
I totally agree- in my business I offer people simple and affordable ways to improve the overall ‘feel’ of their home. Many people do not realise the impact that something as minor as updating the door handles can have on the value of their property, or the likelihood that it will sell.
The market’s still going to be dropping the next year or two. If I can get a raise by that time, I plan to buy a 2 bedroom condo in California. Deals are already pretty amazing down there.
It is important to make a great first impression. If you are thinking about selling your property, you should take an objective stroll up to the front door and into the house. Is the walk nice and clean? Are shrubs trimmed? Is the front door attractive? Is the doormat look worn and tired? How does your mail box look? Is there something of interest such as an attractive wreath or a nice pot of flowers.
Very sensible post. I love my investors who realize it takes money and time to update, remodel, repaint, landscape etc…I can always get them more rent or higher sells prices when we go to sell. I am grateful for the 3/4 investors I have and certainly welcome more. Here in Texas, especially the Austin area, we are staying steady and rental is getting more in demand….
Buying a new home is very very difficult thing if you want to buy it after getting a home loan. i think it is best to properly maintain and repair the house so that in the end you will not need to shift in a new house, only some renovation will cost you to live again in the same house.
With the marketing dropping and set to fall even lower I would suggest it will soon be a perfect time to invest in property. Try to catch it just before it hits the bottom, you will them make money as it rises without any work to the property, although obviously, if you make improvements the gains will be even greater.
Yes, its is true one must invest in the renovation of house. Spending money on new or old house will definitely be beneficial
I have buying and selling real estate for several years and I think most buyer make their decision in the first 60 seconds of seeing the property. If you are looking at fixing a property up for sale, start at the front door and fix everything that catches your eye. This can cost very little and make a big impact.
Homeowners should always check the market value of their homes so that they’d know if it’s the right time to sell or to buy. Home improvements do have a big factor in your house’s value indeed.
The interesting thing about this is that a lot of agents don’t do thorough research. They think showing someone a few properties is enough when they should provide as much information as possible.
I just repainted the walls of the storage room. The next on our list of repainting is the attic and the ceiling of the garage. Hope to get them done next month. We’re not planning to sell but home improvement should be a part of the regular home maintenance.
In todays digital age why not document the work with digital photos that show before, after, as well as the work in progress,
really helpfull,but investment is getting bitter & bitter now a days
its such a difficult time right now and we see property owners all the time with small upgrades that would increase rents and they dont want to do them
I think the market will come back in some small towns very soon. The overbuilt areas may be longer.
Yes, you put in very sensible advice especially with regard to minor repairs and general home improvement. Real estate value can fluctuate due to many factors, among them the are the interior and renovation of the property and also the buyer’s evaluation. If you could make a good impression on the potential buyers, I am sure they would buy the property even if it is slightly higher than other equivalent units.
Home Improvement is not all that daunting a task as some people think it to be. Getting your home improved is a prime concern.
Great article and one that I will happily recommend to my buyers as well as the realtors on my team. It’s always good to hear sensible and intelligent thoughts on a subject that is important to all of us.
If you do not wait to completely renovate the house before you put it on the market, I think the first things that should be done are the front exterior (including landscape) and the immediate interior. Other rooms and places can wait. Make sure the initial points of entry are immaculate to get that great first impression then potential buyers have incentive to excuse the undone portions of the house.
I am involved in a 3-way investment on a property concept and we are existence forced to cozen because of a DOT externalise. Our clear on this dimension will be some $75,000 and we status to amount out how to separate this up. Beingness fold parentage members, we weren’t too haunted roughly figuring this out we bought the attribute.I would truly realise any suggestions from real land investors practised with partnership investments suchlike this.Here are the figures for the city and work/mangement endowed by each receiver.
Investor 1:
Invested $150, 000 by attractive out a regularised domestic word.
Lived at the commodity and payed “charter”.
Did 85% of the upkeep, improvements and holding prop direction.
Investor 2:
Invested $75,000 from a base equity pedigree of ascribe.
Did 0% of the fixing, improvements and property belongings direction.
Investor 3:
Invested $25,000 from a place equity communicating of accomplishment.
Did 15% of the maintenance, improvements and rental holding direction.
I couldn’t agree more. In today’s market, I think it is important for investors to add value to the equation by making the necessary updates and repairs. I f it hard to find the value in a mortgage note when the seller is buying and flipping at twice the original purchase price, if no repairs have been made. I love your suggestion to keep records and receipts to back up the work done and value added to the property!
It will take a better man than me to do a rehab project right now. Cash is king obviously so if you have the cash to do it, it could work. Forget a rehab loan for investment property today though. I deal a lot with SW Florida since I have property there and I found a duplex in an area where duplexes sell for about $180k. The duplex I was intereseted in was trashed. I negotiated with the bank who owns it and they are willing to accept 100k for it. It will take a minimum 30k of work to replace sheetrock, appliances, paint, and carpet. I haven’t closed but I’m working on it!
This might be a small shift in topic, but it is very important for people to not go over the top when fixing a home. There is a point of diminishing return when fixing up a home, and often that point comes fairly quick. An example of this is when people opt for price fixtures. Do not spend thousands on marble counter tops in a home that is only worth $120,000. It will recoup its cost. Do fix leaky pipes, holes in walls, and broken appliances.
I we did the invest game in the commercial realestate realm. We purchased a small warehouse with a front shop that was in real distress. The key was finding one that had mostly cosmetic problems and not real issues (expensive ones)
I totally agree with you on this one. Showing a bit of interest in a property does get you your reward. For those of you out there who still don’t see the relevance, put yourself in the buyers shoes. Would you rather buy a house/flat and move directly in it? Or spend a week, a month or more to repair and renovate the place. Time costs money so why throw it away? I have found from my experience that i don’t even have to sell it at such a high price, ensuring that i get 10-20% over what i put in it, i have past clients throwing new clients at me, and made a name for myself by selling a good comfy home you can easily move into as soon as you sign. I guess you did put it in a more detailed manner, but all in all i fully agree with you.
Nice article Katie. I agree with your article putting investments in real estate or property is really a big decision. I think if we invest little bit on repairing and make modification then we definitely get good profit from that property.
Just spruce up what you have, make some alterations here and there. Update the kitchens, decks, bathrooms, roofs - these are important things to consider.
Hey Katie,
Very good post. I just got married and looking to buy a house however I can’t really decide how much to pay. With today’s financial times things are getting rather difficult to deal with..
If you can not buy a new home. new kitchens with granite countertops, adding a pool, hardwood floors and other improvements can add to the value.
Always a joy to read from you. Really interesting post, I’m noticing it’s getting more difficult to decide how much to spend on a house in todays market. Is it worth ripping out laminate just to add hardwood floors in hopes to increase the price or attract the right buyer?I guess this is a common question you get all the time..
We bought a condo in Los Angeles about two years ago and though it has gone down in value with the market, I still think we did the right thing by purchasing an older unit that is ripe for a makeover. We got a great deal and we haven’t had to invest much to make a huge difference in how people perceive its “value”. I only wish I had some savings that I could throw at a similar unit now!
I think im going to keep waiting for the price to drop, but all you now need is a good credit and you are set.
In this market, home improvement is required for sellers if they are investors or not. The end user/consumer needs to feel at home in the house. It must be in good condition.
Investing in the upkeep of a house can become quite expensive, that’s why I think it is important to invest well in items that will last the test if time. I recently installed hardwood flooring into my home, and although it was a rather large investment I am definitely going to save money in the long run.
Add A Comment
You must be logged in to post a comment.