The New Real Estate Investor’s Guide to Renovation Success
Monday, July 23, 2018, 6:00 PM | Leave Comment
There are myriad reasons you should invest in real estate, from building a portfolio to making a significant profit.
But how can you maximize your real estate investment earnings, especially if you’re new to the industry? Many experts believe that fixer-uppers may hold the key to investment success.
Whether you’re looking to make easy money by flipping a property quickly or hope to boost profits over the long term, here’s how you can make a fixer-upper work for you.
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Work for Yourself as Much as Possible
While there are many things you should know before diving into the real estate industry, including the potential risks and possible tax incentives, you can do most of the legwork yourself. This applies to everything from researching your local market to finding the perfect investment property and making an offer.
After all, no realtor or investment planner is going to understand your budget and needs better than you do. Further, many professionals who have been in the investment business for a long time may use an outdated formula for following real estate trends and suggesting properties without taking your personal ideas into consideration.
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Think Outside the Box
One innovative investment idea involves up-and-coming neighborhoods, which are often home to all sorts of fixer-uppers. Don’t overlook these potential gold mines during your search for investment properties: Every savvy real estate investor has seen a previously underwhelming neighborhood flourish, and they may have livened up their portfolio in the process.
A perfect example of this phenomenon is the transformation of several historic neighborhoods in New Orleans in the aftermath of Hurricane Katrina. The 2006 storm devastated much of the city, and hundreds of damaged properties remained abandoned for several years.
During this period, many new investors came out of the woodwork to snap up properties, often at prices significantly below market value. In the majority of cases, these forward-thinking investors cut out the middleman, buying directly from the property owners.
And their resourcefulness paid off — as of 2015, property values across New Orleans had soared to nearly 50 percent above pre-Katrina numbers. In addition, NOLA.com reports that several neighborhoods saw huge jumps in home prices between 2014-2015: as much as 78 percent in some cases, resulting in pronounced profits for many real estate investors.
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Small Details Can Lead to Significant Returns
Once you have found the perfect property to renovate, it’s time to make the necessary repairs. And investing in a fixer-upper may yield a higher overall return when you take on some of the renovation jobs yourself, according to the real estate experts at Zolo. But there’s no need to be intimidated by the prospect, since even small improvements often make a big difference when it comes time to sell your renovated property.
For example, applying a simple coat of paint can bring a drab entryway back to life, and a minor landscaping overhaul can drastically improve curb appeal. Rest assured that both projects are easy to accomplish, even for those with little to no experience.
One of the strongest selling points of any property is the presence of an eye-catching hardwood floor. Whether the original floor was damaged due to water or normal wear-and-tear over time, fixing a hardwood floor is a straightforward job that’s typically cost effective as well. In many cases, you won’t need to replace a room’s entire floor — only the damaged area.
Conclusion
Just because a house needs a little TLC doesn’t make it a bad decision, investment-wise. On the contrary, making aesthetic and structural improvements to a piece of property, and then reselling that property, is one of the most overlooked tips within the realm of real estate investment. By keeping your eye out for fixer-uppers in trendy neighborhoods, or properties that may only need small repairs to yield a nice profit, you’re well on your way towards long-term investment success.
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