Whether you are new to real estate investment or you have been around the block a few times, you are almost certainly aware of the importance of watching the details. After all, in the end, whether a deal makes or breaks you will be in the “little” details.
However, many while many real estate investors know this in theory, they have trouble putting it into practice. As a result, many get tied up with properties that they have trouble selling, or that do not actually result in a good profit later when they try to sell them.
All too often, this “learning experience” is the result of a very simple oversight:
Failure to Factor in the True Cost of Repairs and the True Value of the Property After Repairs.
Most properties that you will encounter as a real estate investor will require some type of repairs or renovation. Many times, performing these repairs will make a lot of sense. However, some types of repairs, like plumbing and HVAC repairs, can be red flags on your investment. This is because they are expensive and required in order to make a house livable, but are considered to be “invisible” by most homebuyers. This means that even if you have invested thousands in new pipes or a new hot water heater, you may not see a parallel payoff when you sell.
On the other hand, a home that needs little interior work but desperately needs paint and new bathroom fixtures can be bought for very little in many cases and then repaired and sold for a far higher price.
In addition, there are some homes for which the repairs may have very little impact on the end value of the house. In these cases, the value of the house often lies in the location. For example, a home that is located in a highly desirable area may sell for a great price even if you do not do anything other than stage the property effectively. On the other hand, a home that is in a poor location with a bad school system or a high crime rate may not even climb in value after you have dramatically improved its condition. And furthermore, the state of the other homes in the area will determine a lot about what a buyer may be willing to accept in terms of cosmetic improvements. All of these factors: location, condition, neighborhood and local expectations will play a role in determining just how much your repairs will cost, and how much they will benefit you in the long run.
So how can you tell the difference between a repair that will result in a big payoff, and one that will basically “not count” for many potential buyers. “It takes experience,” says one investor who has been in the business for over a decade. “Sometimes you just have to make a few mistakes. Basically the only way to avoid them is to team up with someone who already has made those mistakes and can steer you clear.”
Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate.
If you are interested in talking with Peter further about his private real estate coaching program please respond to this email with your full name and all your contact information.
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Peter Vekselman has been successfully investing in real estate since 1996.
He has completed over 1200 real estate deals, owned a construction company,
been a private lender, and owned a property management company. Peter
currently works with clients all over the US helping them achieve riches in
real estate investing. For more information please visit
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