A very popular and often profitable method to making some money in real estate is simply by buying a property that may not be favorable for other’s to purchase, and turning it into a property that is in demand.  Sounds simple doesn’t it?  Well, it does require a little more work than the basic idea; first you need the right property in the right location, then buying it for the right price takes time, patience and expertise.  Next comes deciding what to fix up and how much of it to do, where to spend money and where not too.  Lastly is the task of selling the home, making the right amount of profit to make your investment well worth the effort.  In this issue we are going to deal with the first two steps, buying the right home and deciding what to fix up. 

It can be a difficult task to find the right property, especially when the market is low on inventory.  At times like these when inventory is low, and buyer demand is high, you may find yourself competing even for a property that looks like it needs a major up-lift.  This is when you should be aware of what is too much for a home.  Buying property in the correct market is essential.  Nobody wants to buy a run-down home for a high price, spend money on fixing it up, and then end up selling it for an amount that actually does not cover the investment and cost of carrying the property.  So be alert and make wise decisions.  We can assist you and we are there to help you out along the way, so be sure to make use of us by simply giving us a call @ Gandhi & Associates, Realty.

Not all of us are experienced in dealing with fixing up our homes, some of us have a great deal more knowledge than others, but that doesn’t mean you can’t go ahead and take on a remodeling project.  There are major fixers that are best left for buyers who have a good amount of experience in renovation and contracting, and then there are cosmetic fixers (listings that lack appeal but that are structurally sound) that can be a great opportunity for a buyer who is less experienced.  When you buy a property, ask yourself, it is feasible for you and your family to do the remodeling that is necessary?   

Once you’ve bought the property, it’s time to make the improvements.  The goal here is to make sure that in order to maximize the return on your investment, you want to make improvements to the property that are in sync with current buyer preferences in the area.  Become aware of the local real estate market and local values to avoid over improving for the neighborhood.  This is where we, your real estate agent, can help you by providing this kind of information. 

If you plan to sell soon, it doesn’t make sense to tackle a major renovation.  If this is going to be a long term project, it may be worthwhile to invest in a major overhaul, but remember that design tastes changes constantly.  For those of you who plan to sell soon, you are likely to make back more from a modest kitchen makeover than a major reconstruction.  National averages show that a complete kitchen makeover allows you to regain 80% of its cost; however a modest redo (new paint, cabinet hardware and floor coverings) repays 87% of the investment.  ALWAYS keep in mind what the resale potential of your improvements will be.  Depending on where you are, the pay back can vary.  Although the national average for a major kitchen renovation may only be 80%, in San Francisco and other Bay Area cities it is possible to regain more than 100% depending on the quality of the job done.

Don’t forget first appearances make an impression.  It is not enough to just make improvements on the inside of a home.  Many buyers say that the “curb appeal” – the way the home looks from the street – is just as important as the inside.  Making a home look good from the outside will not only catch the attention of the buyer, but it can also have a huge effect on the sale price.   People vary in terms of their preferences, some are attracted to the curb appeal, and others say it is low on their priority list.  A few simple tips to improve curb appeal are; eliminate any signs of deferred maintenance that are likely to turn off a prospective buyer; remove and replace dead landscaping; repaint where necessary; and lastly if possible give it some architectural interest, for example replace a chain-link fence with an attractive wood fence.  Of course keep in mind a home that is extremely appealing from the curb should also live up to the buyers’ expectations from within, or prospective buyers may be disappointed.    

A sound strategy and a good piece of advice from us would be to occupy the property while you fix it up.  If you occupy your piece of property, you tend to get better interest rates on your mortgage, an incentive well worth it in itself as you will already have begun to save money.

When you have completed fixing up your property, sell it only if the market is good at that time.  If it is not, then take some time to enjoy living in the property and sell when the time is right.  Current tax laws allow homeowners $250,000 of tax-free gain when they sell ($500,000 for married couples who file jointly).  Some limitations do apply so please contact your tax consultant for further information.

There is a good amount of money to be made in fixer-uppers providing you have the time, patience, energy and savvy-ness.