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There is such a thing as over-improvement. I see one too many people overdo renovation on an otherwise crappy home in a crappy location.
Location location location is the golden rule of real estate.
You may actually lose money installing new cabinets, granite counters, hardwood floors, mouldings, etc.
Good example of flipper fever not too long ago in my area. Some investor bought a 2 story home built in the 80s, thought he could flip it for several hundred thousand more.
The problem was that it was a block away from the freeway. He totally renovated the interior, and ended up selling for slightly less than he bought it for... after renovation cost and over 1 year on the market.
School district is good, but school district alone does not sell a home.
Another example was this uglyazz single story home. Same issue as above. Flipper thought he could make the interior "mansion quality," but the front of the home still looked like a 1950s tract home box. It looked super cheap on the outside, overdone on the inside. Sale was a slight loss after 1 year on the market, property taxes, renovation cost, commissions.
There is such a thing as over-improvement. I see one too many people overdo renovation on an otherwise crappy home in a crappy location.
Location location location is the golden rule of real estate.
You may actually lose money installing new cabinets, granite counters, hardwood floors, mouldings, etc.
Good example of flipper fever not too long ago in my area. Some investor bought a 2 story home built in the 80s, thought he could flip it for several hundred thousand more.
The problem was that it was a block away from the freeway. He totally renovated the interior, and ended up selling for slightly less than he bought it for... after renovation cost and over 1 year on the market.
School district is good, but school district alone does not sell a home.
Another example was this uglyazz single story home. Same issue as above. Flipper thought he could make the interior "mansion quality," but the front of the home still looked like a 1950s tract home box. It looked super cheap on the outside, overdone on the inside. Sale was a slight loss after 1 year on the market, property taxes, renovation cost, commissions.
Yes, I've seen this a number of times. I figure it's a new or young flipper w/o experience.
When I began shopping for houses a few weeks ago, I told the realtor that I would most like a small bungalow built between 1940 and 1960. I grew up in one and love the style. What I'm finding is that many have been renovated--new kitchens, nice bathrooms, etc. That's all well and good, but these older houses are also located in higher crime areas of the city. I will not buy the house of my dreams and spend my old age fearing burglaries and car theft.
OP, I also have seen that. Sometimes developers buy a bad location in a nice neighborhood either to flip or build new. The houses tend to sit and sit and eventually sell at much lower prices than comparable houses in better locations. Duh! Did the developers think they were really shrewd to get a good "deal"? The property they bought was discounted because it was right on a busy road or noisy highway. If it's a fault most won't accept in a cheaper house, it's a fault people won't accept in a house the developers have improved to the point of doubling its asking price.
The less expensive fixes will add more value without raising the amount of cash put into the cost of renovation... not needed to go all out in many cases. Also I'm not a fan of barn metal on a roof.. if not shingles, do a proper metal roof that doesn't have exposed screws. Granite on an otherwise inexpensive older home sometimes makes no sense if the rest of the home looks like ass...
In the mid-2000s during the boom years "investors" were throwing granite countertops and stainless appliances into everything and then flipping for a profit. The improvements had nothing to do with the rising prices and during those years of 20-30% appreciation most could have made more money by just sweeping the floor and reselling.
I agree you can't put money into a house next door to a condemned home with squatters and expect people to pay good money to live there. You can't throw $20K into a home that is only worth $50K in that market.
It's amazing to me that people don't shop harder for real estate. The best way to make big bucks on flipping is to shop for distressed property. That can be deferred maintenance because the owner fell on hard times or got too old to keep up. Something as simple as an overgrown yard and a bad paint job, or cracked driveway and sidewalks, can make a big difference in purchase price. You can put all new finish in a kitchen, but a stupid kitchen layout will be a stupid kitchen layout forever.
It depends on why you bought the house. If you bought it for "flipping," then yes. If you bought it, as we did, because we wanted to be close to family and save an old house, then it's a different set of priorities. The house we bought is located in a run-down small town with low property values--with an incredible history, people committed to preserving and rejuvenating the town, and wonderful neighbors. The house is 100 years old, in the historic district, and represents that history. It's worth saving, as is the town.
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