Investing in Real Estate; Is It for You?
My husband, Walter, and I own several rental properties that we have renovated then rented out. It’s great and reliable monthly income, but it definitely doesn’t come without the work. Have you been thinking about investing in properties to either rent or resell in 2017? Keep reading to see if this would be the best option for you.
Add it up
Seems obvious, but before proceeding it would be prudent of you to make sure that you will actually turn a profit. The equation is simple; how much you pay for the home plus estimated costs of renovations, take that number minus home sales of comparable value in that neighborhood. Make sure to take 5% – 10% on for wiggle room if you want to add something else or if something comes up. Is that number positive? If it’s positive, is the number enough to be worth all the work?
What kind of updates does this home need before resell? If they are reasonable, minor updates and general maintenance, then this is a great, and relatively inexpensive, investment opportunity! However, if the home needs large, fundamental updates such as new plumbing, electrical, extensive roof or wall work or foundation repairs, it’s best to steer clear. These updates aren’t as “visible” and don’t raise the value enough to offset their cost.
Projects that pay
Updates that virtually always guarantee return on your investment are the direction you should go. These cosmetic updates include, but aren’t limited to; new paint, floor refinishing, updated fixtures, drywall repair, new doors and shutters, updating kitchens and bathrooms. Throughout any renovations, make sure you don’t price yourself out of the neighborhood. Aim for 10 to 15 percent above the median sale price for homes in your neighborhood.
Roll up your sleeves
Doing the work yourself is the best way to save money when in the renovation market. If you don’t have the skills (or the desire to learn) to make even the most minor updates to a home, then you will end up paying for it when you see the bottom line. Contract out work that you aren’t qualified for, but make sure you’re doing your part in the repairs.