NOTE: This information is part of our upcoming book, the Gotcha Guide™ to Buying or Investing in Real Estate.
by DeeinAustin™
I was doing a pre-market walk-through of some rehabs in East Austin when I received a call from Jay Papasan's team at Keller Williams International. They asked if I'd like to interview on their popular Millionaire Mondays show.
As always, I'm very honored and excited to be asked to provide real estate investing advice, but purpose of this post isn't to toot our own horn about the show (even though that's VERY cool). I want to remind readers of a few principles discussed during the pre-listing consultation today.
REHABBING HOUSES IN TODAY'S MARKET
My investor isn't a beginner, but he's putting about $50k into each project. My job is to make sure he makes the right choices and saves much money as possible. Keep these tips in mind BEFORE you buy:
- Always know your final sales price. Base your final sales price on homes that have SOLD, then work with a market expert to calculate where that price will be once your project in done. They should give you a high, middle, and low range.
- Don't over-improve. This can sound simple, but investors think wood floors and granite counter-tops will always get them a great return. Wrong. Why buy a higher-grade finishes, appliances and fixtures when the step below will suffice?
- Don't cheap out. This sounds contradictory to tip #2, but it's not. Some investors cut corners on finishes because they've gone over budget. Buyers won't immediately notice the stellar job on the foundation or plumbing, but they will notice a vinyl floor in a neighborhood where ceramic tile or wood is standard. Fix major issues first, but choose wisely when you downgrade finishes.
- Know your buyer. The type of finishes, floorplan, landscaping, etc. will all depend on your potential buyers. Understand who is buying, renting and selling in your area. More importantly, know when you've priced out a particular type of buyer and which drawbacks (like a busy street) will completely scare them away.
These are just a few tips that can keep you out of trouble. Stay tuned for my interview with Millionaire Systems during their weekly investor call.
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