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I would not call it funny, but rather delusional. Where to start. I have to say that as someone who has owned single family homes as rentals and made some money improving them and selling them WHILE THE MARKET WAS MOVING UP STRONGLY the reality is that even that is a very time consuming and potentially costly undertaking. It is extremely rare to find a home that will be "value enhanced" by more than the cost of materials in basically even RED HOT markets. You pretty much NEED to find a home that is thisclose to destroyed to be able to turn it quickly, as the transaction costs and financing costs are stuff that you cannot budget around -- there are some dirty little secrets that "Flip This House" and other shows hide pretty well. #1 is that generally there are MULTIPLE reasons that a sad little run down house gets no buyers -- the whole section of town has no buyers, financing is tight for buyers, house has negatives that fresh paint and new counters won't address (like some one dying in the place, persistent nuisances nearby (noises from air port, vicious dogs, odd industrial smells too close by, crime, all night bars too close)...)
#2 Once you change "anything" in a house you have INCREASED YOUR COSTS and you HAVE TO sell for more, meanwhile there are other folks that may own homes nearby that are free and clear and they are just as clutter filled and have ugly counters from the same era, but since they inherited the place when Uncle Bob the Slob died in it they can profitably sell for a FRACTION of what you can...
#3 Foreclosure / short sale /REO all three of these are much much more common NOW than they have been anytime in HISTORY. This is BAD NEWS for some one looking to make a profit with a quick sale because folks in ANY of those three situations are also looking for quick sale {at least in theory...} BUT they have NO PRESSURE to make a profit, they are instead looking to "not lose too much" which is a VERY VERY different thing. If you have ever been in card game with some one "trying not to lose" you know they can bleed the pot out to nothing and generally make even the skilled competitors fed up. In the arena of selling houses a similar sort of blood bath can make it impossible for you to market your property at anything close to a profitable price point.
For the above reasons, and a whole bunch more, I have to say that the near zero risk of simply renting for a period makes so much more sense for the OP that if choose to do otherwise they are pretty much hoping to embrace failure...
There are 2 different posters asking questions on this thread. The one who's trying to flip in 6-12 months... it's smarter to just rent - if you try and flip, you'll probably lose money once you add in all of the transaction costs plus you have the headaches of renovating a house while living in it. The other poster with a 3 yr time horizon for flipping. There's a potential of breaking even or making some money if you're an experienced investor that can find the "right home at the right price". If you're new to investing, it's a bigger risk.
Hey all - my young family lives in Roswell, GA N of Atlanta (been here 15 years). We're lucky - we just sold our home. But in the process - somehow we realized that maybe Georgia is no longer for us.
My wife needs to stay with her job here at least until June. But we're currently renting short-term. We want to take advantage of the $6500 tax credit before April. Plus, rates are low.
Yet we ultimately see ourselves moving back north closer to family (somewhere in PA/MD/N VA, etc.).
Sooooo - I thought maybe we could find a little fixer-upper here. Buy it, put a roof over our heads. Then add nice counters, a deck, new paint/carpets, etc. Put it into pristine condition. All this time - we'd know it's not our long term house - but an investment we'll sell when the time is right.
No way to predict. But my thinking is that with $10K in inprovements and if we buy the house dirt cheap - we'd win there. The economy will gently pick up soon - so we'd pick up a little there, too. In the end - sell it in perhaps 6 months to a year for a little profit. Then we've killed two birds with one stone.
Thoughts?
Don't bother if you are going to skimp on improvements. In this market you need higher end finishes and appliances = real wood floors (either engineered floating or glued or nailed in). Don't do laminate or plastic pictures of wood grain laminate- "wood". Nothing spells CHEAP CHEAP and CUTTING CORNERS like that. It is a TOTAL TURNOFF TO BUYERS.Next don't bother with low end stainless appliances. If you are going to do stainless, do it right. Gas stoves are better than electric. Pull outs in cabinets or drawers are better than plain cabinets. This is one of the first things I look for in a kitchen. I'd rather have extra deep drawers or pull-out cabinets and Corian or cement counters in a kitchen than a kitchen with granite or quartz counters with no pull out storage.
If you aren't willing to spend the $$$ to do stainless appliances right, upgrade size -wize and feature- wize with black or, if you have a white kitchen, white appliances (I'd rather have an $700 white stove that is the equivalent of a $1200 stainless one rather than a low end $500 stainless. Don't do cheap laminate counters and cabinets and shallow sinks either. These are more turn offs to descriminating buyers.
Pluses are real tile floors in bathrooms and kitchens; windows in bathrooms; smooth ceilings;
wood crown moldings and nice outdoor spaces, patios, decks, porches and lots of storage!
Don't bother if you are going to skimp on improvements. In this market you need higher end finishes and appliances = real wood floors (either engineered floating or glued or nailed in). Don't do laminate or plastic pictures of wood grain laminate- "wood". Nothing spells CHEAP CHEAP and CUTTING CORNERS like that. It is a TOTAL TURNOFF TO BUYERS.Next don't bother with low end stainless appliances. If you are going to do stainless, do it right. Gas stoves are better than electric. Pull outs in cabinets or drawers are better than plain cabinets. This is one of the first things I look for in a kitchen. I'd rather have extra deep drawers or pull-out cabinets and Corian or cement counters in a kitchen than a kitchen with granite or quartz counters with no pull out storage.
If you aren't willing to spend the $$$ to do stainless appliances right, upgrade size -wize and feature- wize with black or, if you have a white kitchen, white appliances (I'd rather have an $700 white stove that is the equivalent of a $1200 stainless one rather than a low end $500 stainless. Don't do cheap laminate counters and cabinets and shallow sinks either. These are more turn offs to descriminating buyers.
Pluses are real tile floors in bathrooms and kitchens; windows in bathrooms; smooth ceilings;
wood crown moldings and nice outdoor spaces, patios, decks, porches and lots of storage!
No.
Unless you don't know the local market, the price point or what is expected in that particular neighborhood/area - you can't begin to dictate what someone should or shouldn't do when remodeling.
You don't know what will be a good investment and will help push that home to the front of the pack - or what is just pouring money down the drain.
i do not think that to make money in property...it'd necessarily mean having to update fixtures & add in fancy appliances. making money can mean buying it at a good price and then reselling it when the price picks up....if you need the fancy fixtures and appliances to sell the house...you probably have bought the wrong house for investment anyway. no matter how great the granite countertops, cabinets & top of the range stainless appliances....there'd bound to be potential buyers who have totally different taste from you....and can't wait to rip out everything...much less pay for them.
The bottom line is that if you're buying an investment property to flip in the future, you need to completely understand the homes in the neighborhood and surrounding areas, so that you don't under improve or over improve. If you under improve, you've spent money on improvements but still have to discount the sale of your home because the competition is better. If you over improve, you won't be able to get the cost of the over improvements out when you sell your home, so you've left money on the table.
Rehabbing and flipping houses is not for the inexperienced. Our current market has been fueled by many "Investors" who were going to try and make a bunch of money.
It can be done but you need to know what you're doing. Proceed cautiously.
me and my husband have the same idea we bought a house for 140k barley but five thous. in to in so far (we painted new baseboard heating, wood floors stainless appl. found off craigslist and granite and an island we did all the work ourselves which is key to making money dont hire out ppl.. after doing the bathroom (regrout the floors new tub and sink) it will put us at around 7k at the end of the day, and we can put our house up for 215k i could see it selling for 200k...a house identical to mine(neighbors) just sold for 175 and mine has a sunroom addition and a partially finished basement and theirs had absolutley no upgrades,so yes it is more than possible you just have to be smart about where you spend your money GOOD LUCK!
Here in Seattle, a "cheap" house is under 320K. My husband and I were looking at 2 bed/1 ba starter homes for a while, though the typical low price for those is 450K. We can afford that, but man, the 320K houses are pretty tempting. There is one (2bd/1ba) that is very small (730 sqft), but located on a bit of land and has room to grow. It is also located in the Unversity District, which means an endless supply of future renters. The house is already in good shape with many updates, and we could put down half the asking price and only have about $800 a month in mortgage payments (we are currently renting an apartment nearby, same size, for $1275). Probably
be more like $1500 a month if we got a 15-year mortgage, which we could still easily afford and be able to save $1000 a month after expenses.
So here's the question... is it a good idea to buy a "cheap" house, live in it for, say, 5 years... then when we need a bigger house (we are planning on kids within 2 years from now), move out and rent it to students for an added monthly income? By that time we would have added to our savings enough to afford another downpayment, and we would be able to buy another house while remaining landlords of the first, small house.
Or is this a stupid idea? I am really drawn to the idea of getting a cheaper house at first, paying it off mostly, then renting it out while we upgrade to a bigger place once we are in a position to need more space (with kids). But I want to k ow if this is overly idealistic. We would not be flipping or selling it... just renting it out later. Or is it better to forego the whole landlord thing, buy what we want now, and just be on the hook for a bigger (30 year) mortgage every month?
Thanks for any thoughts.
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