So you think you are ready to be the next Donald Trump
The number one rule in investing is never purchase a property unless you know how much it will be worth after it is fixed up. Let us help you know who your buyer is and what they are looking for.
The Real Estate Rehab Profit Formula:
Take The Maximum Retail Value
Then Subtract the following:
Purchase Costs
Rehab Costs
Holding Costs
Sales Costs
Contingency Factor
Profit
This Establishes a Maximum Purchase Price:
Keep in mind in the rehab investment field; you are working with motivated sellers and ugly houses! If it is not ugly and the seller is not motivated you're wasting your time.
Furthermore, we can help you negotiate from a position of strength.
Where do I spend the money?
Buy cheap on most items and expensive on a few. The exception ceiling fans, sink faucets, towel racks, lighting fixtures, mailboxes, house numbers, ad wallpaper borders. Always use name brand paint you can always find them on sale somewhere in your local stores. Know the dollar adjustments for repairs that lead to the maximum retail value. The dollar adjustments are based on market-derived values, not on the actual cost of the feature.
A few things that must be repaired:
- Dark or inadequate lighting
- Damaged vinyl flooring
- Outdated countertops
- Broken cabinets
- Damaged, or stained sinks
- Ugly, outdated or inoperable appliances
Two rooms that really count - Kitchen and Bath in that order
Money spent in these two rooms will always meet the two basic investment criteria: increase in value and increase in value and increase in marketability. Keep in mind a woman makes the house-buying decision 85 percent of the time according to a recent study published by the Real Estate Center at Texas A&M University.
A Website that every investor should take a look at:
www.remodelingmagazine.com
