Real Estate Investor Series: Part 4 of 6!

Profiting from the Fixer-Upper

Many real estate investors earn a living out of renovating run-down properties and reselling them, or holding onto them for rentals. Commonly known as the fixer-upper, it offers you two paths to real estate investment.

Buy a Fixer-Upper and Sell Again

In addition to offering a handsome profit, fixer-uppers can offer a true sense of satisfaction as you transform a dilapidated property into one with true appeal. But before you take the plunge, ask yourself three questions:

1. Can I buy it far below market value?
2. Can I do much of the work myself (or contract it out at reasonable rates)?
3. Can I get the job done quickly?

Remember, every month you add to the project is costing you in lost rental income, taxes, insurance, utilities and more.

Buy, Raise the Rents, and Sell Again

Quite often the tenants in a rental property are paying below market rates simply because the landlord hasn't raised the rent in years, or perhaps the property is not maintained well.
Both scenarios present you a great opportunity to buy the building, raise the rents (making upgrades if necessary) and resell the apartment building at a higher price. This raises the GPI-the gross potential income-which is the maximum gross income generated from the rent if all the units were occupied.

If you would like more information on these types of investment properties in our area, please don't hesitate to give us a call or send an email.

Warm regards,

Tips for Buying a Fixer-Upper!

Buying a "fixer-upper" can be a great way to earn sweat equity, but it also can turn into nightmare, end up costing you later on.
What are the rules to follow to find the right property to fix up or flip? Buy a house at least 30% below market value, so that you have profit left over after spending the money to fix it. Location is still very important- no matter how you fix up the interior, you still can't change the location. Go for the more popular 3-4 bedroom home, more buyers are looking for this size. Take your time to find the right property to flip and call me when you're ready to start looking for one!

A recent Realtor Magazine article helps sort out the rules of Fixer-upper.

Mohamed Mekhimar , Realtor®, Accredited Buyers Representative , RE/MAX Commonwealth, mekhimar@remax.net, (804) 243-0605 Cell, (804) 288-5000 Office, (804) 288-8989 Fax, http://www.richmondvahomes4sale.com/, Licensed in the Commonwealth of Virginia

How to Cash in on a Fixer-Upper!

It's commonly believed that fixer-upper properties represent easy money that is ripe for the taking - that you can buy it, do a little work on it in your spare time, and then resell quickly for a large profit. Usually, this simply isn't the case. Although, with proper planning and foresight, good profits can be made by buying "distressed" properties at less than market value, making appropriate improvements and repairs, and then reselling. And for many first time buyers who intend to live in the house while working on it, buying a fixer-upper can be the very best option. It's less risky buying a fixer-upper when you can live in the house while fixing it. And of course, by living in the house for at least 24 months you should be able to avoid paying regular income taxes on the profits. The most important thing to know before making a decision on such a purchase is what needs to be fixed.
Be careful that you don't over pay. Especially if you plan to resell quickly, paying too much up front can doom your plans for quick profit. Research the market for reselling and have an exit plan for selling the house in place before making an offer.

CONTACT ME for assistance with RICHMOND REAL ESTATE
Mohamed Mekhimar , Realtor®, Accredited Buyers Representative , RE/MAX Commonwealth, mekhimar@remax.net, (804) 243-0605 Cell, (804) 288-5000 Office, (804) 288-8989 Fax, http://www.richmondvahomes4sale.com/, Licensed in the Commonwealth of Virginia

Tips for Buying a Fixer-Upper!

Buying a basically sound house and updating the cosmetics is a profitable thing to do in almost any market. But be careful what you buy or it may end up costing you later on.

Here are 10 things to consider when selecting a fixer-upper:

1. Purchase homes that are at least 30 percent below the market value of comparable nearby homes.
2. Choose a location with a low crime rate, good schools, and quiet streets. There isn’t anything you can do to cure a poor location.
3. Choose a house with three or four bedrooms. Smaller homes are unlikely to have enough buyer appeal.
4. Avoid homes that need major unprofitable repairs, include wiring, major plumbing, foundation repairs, major kitchen and bathroom renovation, room additions, and/or a new room. Spending money on these basics doesn’t add value. Buyers expect them.
5. Find a home that needs profitable cosmetic improvements like fresh paint inside and out, new light fixtures, new carpets and flooring, and fresh landscaping.
6. Look for affordable, low down-payment financing, such as taking over an existing mortgage, lease with option to buy, seller carry-back financing, or a combination.
7. Avoid obtaining new bank financing until the fix-up work is completed and the home’s market value has increased.
8. Don’t buy a fixer-upper that is more than 60 minutes from your current residence because it is important to visit everyday while the renovation work is being done.
9. Make sure that the seller or tenants will vacate immediately upon transfer of title.
10. Look for sellers who are motivated to sell and who want to make the sale happen.Source:

Inman News, Robert J. Bruss (09/01/07)