Will I get my Money back?

TV lineups seem to be fairly bursting with Real Estate Shows, from flipping to restoring, renovating to landscaping, curb appeal to interior design – there is something to be found for anyone. Yet, the same questions still come up - will I see a return on my investment? For many markets, you’ll be best served by using a Realtor – but to just give you some ideas, as to where your Dollar would be most likely to return to you in case of a sale, check out the following link: A big payoff from the tiniest room

How much is TOO much?

You are considering selling – but in the back of your mind, you’re wondering….what should you do, to make sure that you’re home is “up to par”….?

You’ve seen “those” shows – they are everywhere, any station at any time – or so it seems. All of them promote remodeling, staging and fixing up your home prior to selling it. If you watch enough of them, you can’t help but wonder: Should I renovate? Remodel? Paint? Stage? Heck, obviously, something needs to be done prior to selling…but what?

If you’re thinking along those lines – stop. Take a good, hard look at your home first. Pretend you’re a buyer, looking at your home for the first time. If you can’t – have a friend do this for you. Walk through the house, and take it room by room. That’s how the “little things” we tend to overlook as we live in a home, become obvious. Is the paint chipped on the corners of the baseboards? Are there finger prints on the walls – specially around the light switches? Is the door not opening properly? And what happened to the yard? Where did the weeds come from? Has the closet always been this full? And why is it so dark in this bedroom? Has a bulb burned out?

Many of those little things are truly that – small items, that are easily and inexpensively fixed, yet have a huge impact on how a buyer might experience your home.  Take care of them first and then re-evaluate your home. Maybe by now it’s  ready to “strut it’s stuff” to potential buyers. If you still have doubts of feel the need to do more, take a look at some other items … on the decorative side.

 Items, that might cost a little more – like hardware. Kitchen and/or bathroom faucets, cabinet handles/knobs and door handles/knobs. Are they worn out or scratched in your home?   Do they work? Or do they need that certain “twist” to open/close? Does the key actually lock the front door? Take a look at your hardware, and decide accordingly. This doesn’t mean that you need to replace each piece, but make sure they’re in working order and clean.

Whatever you decide to do – either on your own, or with the help of a professional – keep in mind – if you’re getting ready to sell, this is not the time to spend a “ton” of money on your property, (See previous article on remodeling.)  unless it has deferred maintenance, mechanical, functional or structural problems. If your home is in good condition (structure, systems, maintenance) then this is the time to showcase your homes good features, not change everything. Think about what attracted you to this home in the first place? The goal at the time of sale is to “break even” or get some money due to appreciation etc – not go broke due to remodeling “overboard”.

Thinking about Remodeling?

If you’ve owned your home for any length of time, you might have started thinking about remodeling. With all the shows on TV, promoting the benefits of remodeling, it’d be no wonder if you did – think about updating/replacing/remodeling that is.

But what should you do and what should you consider before tearing out that first tile, wallpaper or carpet?

Before doing anything – and I mean ANYTHING – make a plan. Decide what you are trying to accomplish by remodeling. Are you trying to add more space? Update your home? Make it more energy efficient? Or are you trying to increase the possible resale value?

Once you’ve discovered what drives you to remodel, plan out your project, or projects. How will the final product look? Will it improve the traffic flow? How will you use the remodeled area? What are the costs? And in comparison, how much do you have to spend? And who will do it? Can you do the project yourself? (From planning, to permits, to completion?) Or should you hire a professional?

While the return of investment varies, a good rule is to update/remodel your home, so it matches the homes in your neighborhood. If you add “too much” to your home, you might not be able to recover the investment, when it’s time to sell. People not only pay for the home, the also expect to pay a certain amount for a certain neighborhood. Meaning: Don’t over-improve your home – specially if you’re remodeling to improve ‘curb appeal’ and resale value.

If you really can’t live with your home “as is” any longer – it might be time to consider moving to a home that already has some or all of the items you are looking for.

Ready to Invest in Real Estate?

Have you ever thought about investing in Real Estate?

If your answer is yes – but you’re not quite sure where to start – ask yourself some of the following questions:

Before you spend your first Dime, try to decide, what type of Investor you would prefer to be? (You want to determine this for each property you purchase…) Are you interested only in the quick turn over, commonly understood as the “fix and flip”, or are you in it for the long “haul”?Fix and Flip sounding more appealing? Make sure you have the necessary understanding of

1. The Market
Is the Market on an up or down swing? Are people reducing home prices dramatically every month? Or are the selling prices increasing? What is the average selling price in an area? The average time a house is on the market?

2. The Work
Have you done remodeling and/or construction work before? Can you estimate the cost of projects to be done? Do you know what repair/replacement/remodeling job needs to be done first? What are the Building Code requirements? How long will the work take? And who will do it? Will you hire someone? Are you qualified to do the work yourself? Do you have the time to do it?

3. The Finances
Do you have the required credit rating to purchase a property? How much money do you have available after closing costs? Can you afford to own the property until it’s ready to sell? And while it’s on the market for Sale? Can you pay for materials and workmanship? How much will it cost to fix up the house? How much will it cost to sell? Will you “come out ahead” and make a profit at the time of Sale? What about tax issues? Have you talked to your Accountant?

If you’re thinking, that maybe your first Investment Property should be long term, (buy, hold and rent out) consider:

1. The Market
How many Rental Properties are available in the area that you are considering? (What is the Vacancy Rate?) What is the turn over of Tenants? The average rents? Are new possible tenants moving to town? Are new companies opening in town and possibly bringing in new people? Where will your Tenants come from? Is the Property move in ready? Or does it need work? Should you purchase a Single Family Home or a Duplex? Fourplex?

2. The Work
Who will handle the management of the property? Will you hire someone to do the regular maintenance? Who will find the tenants? Who will be responsible for contracts? And what is covered under your contract? Who is responsible for the collection of Rents? Who is the Emergency Contact? Who will get the property ready for new tenants if someone moves out?

3. The Finances
Do you have the credit and the income to purchase property? After paying the mortgage and all the associated Expenses, will you break even? Have Cashflow? Or reduce your taxes? Do you have the reserves to keep up the maintenance? What are the associated costs with owning that particular property? Are records of it’s history available?Does all this sound scary?

In my opinion, investing in Real Estate is still one of the best things going. If you do your home work up front! You want to avoid “impulse” and “emotional” shopping. This is strictly for profits – and you make your profit when you buy. You either purchase a property low enough, to be able to fix it up, sell it and walk away with cash in hand, or to hold it, find tenants and not have to pay out of pocket for mortage, maintenance and taxes.

The preceeding was a sampling of issues you should consider before investing in Real Estate. Please talk to your Accountant/Tax Advisor and Realtor, for additional Information. You might want to ask, if either of them, has any experience with Investment Properties. Then run the numbers for yourself as well.

Colorado Springs Real Estate Information brought to you by the Colorado Highlands Group