You’ve watched the real estate market for a while and are ready to make the plunge. Now that you’ve decided to sell, what do you look for?
It can be tempting to make an offer on the nicest house on the block. This is a mistake. If you buy the most expensive house on the block, you have no way to add equity through improvements. If the homes around you are selling for $300,000, you will never get much above this figure.
A better approach is to buy the „beater“ home in the area. This is the home with the horrific landscaping, peeling paint, cracks in the driveway and so on. Although it looks beat up, this fixer home is the root to a profitable investment. Why? Well, assume we are in our $300,000 neighborhood and this home is selling for $250,000. You can probably get it for $230,000. So, now what?
The key is the vast gains you can make with some relative inexpensive changes. Cosmetic problems are the easiest to fix. With our beater, converting the landscaping into something nice is probably going to cost you $1,000 or less and a lot of sweat. Painting may set you back $5,000 to $10,000. Fixing the cracks in the driveway may run a couple thousand dollars. For a total of $10,000 to $15,000, you can improve the home to „average“, which means you’ve paid roughly $250,000 total for a $300,000 home. You’ve just made $50,000!
Now, a word of caution has to be given. Buying the fixer on the block is only wise if the problems are cosmetic. If the home has fundamental problems that are going to cost a lot of money to fix, run for your life. Foundation problems or major termite problems can be a real nightmare. If it is easy to fix, buy it. If it isn’t, don’t!
There is a final way to make money in real estate. The strategy is called buying when everyone else is afraid to. This is contrarian thinking. If the fundamentals of an area are good – low crime, good schools – then prices will ultimately bounce back. This is exactly the situation we see now, so you could really be looking at major bargains in the future.Immobilienmakler Heidelberg Makler Heidelberg
Source by Raynor James