Smartening Up An Older Home For Profit

If you have just bought an older home with a view to renovating it and flipping it (a sort of slow flip at the moment!) then you will do your best renovating work if you have some respect for the homes’ original character.

Many people do actually like to buy a ‘character’ home as we so tactfully call the old beaters, and if the renovating work has been done in a fashion that preserves it, yet gives new life to its style, it will be much easier to sell. Attempting to push the modern look into what is obviously the older look is like putting a ninety year old in a bikini – it shouldn’t happen!

Becoming accustomed to a smaller sized room can take a while; it helps if you can find smaller furniture. Many older homes have smaller rooms that even if knocked ‘through’ – one into the other – can often still feel small or awkwardly sized.

However, there are some people that actually want to buy small homes; this will be especially true in a few more years when the baby boomers retire. They will start selling up their large (and empty) family homes and re-buying smaller homes. Smaller rooms are easier on the heating bills so they may be a big plus soon!

Realtors inform us that certain improvements add money and others are not worth doing unless it is for your own choice. One well known realty chain even carried out a thorough survey that estimated the percentage amount of return value each renovation was worth.

However, in order to get the maximum returns, you would have to modernize the home according to its own unique style. For instance, if you modernize the living room by uncovering the original hard wood flooring, then it is good sense to beautify it. But if you add sleek stainless steel wall lights and black leather furnishings you will not be enhancing the house’s style.

However if it has mediocre flooring and you add new carpeting throughout, you will also be adding value to the property according to the survey. If you are seriously renovating your home as an investment property you need to think in terms of neutrals and pale colors; many people do not find purple carpeting throughout the house appealing!.

One up-grade that will give good returns and may also be essential on an older home is the modernization of the windows. This will increase the value of your property by as much as eighty per cent of the amount that you pay to replace the windows. Having double glazed windows will also appeal to the green buyers out there.

The same percentage amount can be expected from replacing the roof. This is quite a costly job, but as four fifths of it will be returned to you when you sell the house, it is a good investment. If you are planning to replace the roof, you may consider the added investment of a wood stove. If you buy a new government approved air tight one, you can apply for a federal grant to help pay for it. You can get as much as 94% back on the cost of your fireplace when you sell the house.

One of the biggest percentage returns you can get on one renovation is to add on a bathroom. This will get you a whopping 96% return on your original cost. But it is still not the biggest return you can get.

That goes to the most labor intensive and tedious job you can imagine – painting the house! For this you will probably spend about $700.00 in outlay and it will be returned to you by 200% plus – of course the plus is for the back ache!

Smart Real Estate Investing

There are many things that you can do to make yourself a smart real estate investor, and give yourself a jump on the competition. If you don’t know a piece of property is going to go on the market in the future then there is no way that you are going to get the listing.

Foreclosures

For the smart real estate investor, there are many opportunities for making large amounts of money in foreclosures. Our country is now in a recession that is causing a record number of real estate foreclosures.

Foreclosure investing is a specialty all to itself within the world of real estate investing. Since this highly targeted and specific market is dominated by competing investors it is vital that you become educated in all the different ways money can be extracted and earned so that you can dominate your competition in finding the best deals first.

For a majority of people, the conventional way to buy property is to go to the bank and ask for a loan. If and when the bank agrees to lend you money to purchase property, you then sign a mortgage that contains a promissory note. The purpose of this promissory note is to insure that if you don’t pay back the money that they loaned to you, then they can take back the collateral, which is your house.

The number one reason for foreclosure is divorce. The main reason is, that before the divorce, there are two people contributing to the house payment and after there is not. The smart real estate investor knows this, so to get a jump on his competitors, he develops a source that lets him know about recent divorces. He now can contact the people directly and possibly work something out with them directly.

Other things that cause people to stop making their mortgage payments include heavy credit card debt, unemployment, job transfer that involves re-locating, serious illness and death.

Pre-foreclosure

Pre-foreclosure is the first step in the foreclosure process. This usually happens when the bank starts to get nervous because the homeowner has fallen behind in their payments. The bank will send the homeowner a certified letter that states if the homeowner does not bring their payments up to date, then a sheriff will show up at the house to evict the inhabitants. The bank really does not want your house but they will take it if they have to. This is a great opportunity for the smart real estate investor, because during foreclosure the investor has little risk, no liability and many times no requirement for money or credit.

The Biggest Risk

The biggest risk when working the pre-foreclosure market is associated with what mortgages, liens and judgments are coming with the property that the smart real estate investor is purchasing. This risk can easily be overcome with a little research on the part of the buyer. Just remember that liens, loans and judgments are public record and recorded at the county courthouse. It is a very good idea to hire an attorney to do a preliminary title search for you because they are very familiar with the process.

Auction By Trustee

These auctions are usually held at the county courthouse, and give the bank an opportunity to sell the house, even at a big discount, rather than continue to own it. Since these properties are sold as is, the smart real estate investor always makes a detailed inspection of the property before they bid on it. The third and final stage of foreclosure happens when no one purchases the property at auction, forcing the bank to buy the property back itself.