Renovating Homes For Fast Sale and Maximum Profits!
This home was purchased for $45,000 and sold for $124,000 getting multiple offers the second day it was listed! Right now across the country there is a shortage of housing stock available for buyers. In many markets the foreclosure inventory has dropped significantly and while there has been moderate recovery, many home owners who would like to sell are still underwater. Homes that have been RENOVATED CORRECTLY SELL FOR MAXIMUM PROFITS!
Consider 1150 Burning Bush Drive in Loganville, GA. We helped advise our investor client to buy this property two years ago for $45,000. It's a 4/2.5 home that offered market rents of $1,100 per month. The first renovation was cosmetic in nature as we waited for the market to appreciate enough to make a large profit. When renovating for tenants for maximum profits, you leave the old laminate countertops, the existing pergo flooring that is in good shape, and put in builder grade carpet. This allowed our client to project 15% ROI (Return on Investment) per year while the market shot through the roof. When we bought the property for $45,000 there were already higher comps of $65,000 and $70,000, proving that you MAKE MONEY WHEN YOU BUY in real estate.
After keeping the property as a rental for nearly three years, we advised our client to sell, as the builder grade carpets were in need of replacement, and the interior and exterior now required painting. It didn't make sense to do that kind of renovation to place another tenant in the property and we turned down a tenant that wanted to pay $1,400 per month, because comps said that we could sell for as much as $130,000.
Get The Right Contractor
I immediately called my good friend Brad Kuss, who has many years of rehab experience. He is prior military, knows how to hit deadlines, does extremely good work at very reasonable prices and is a striaght shooter. His subs do work at the right prices and realize that on investment properties the bottom line is very much affected by rehab costs, which must be kept down. Make sure you used a licensed, bonded and insured contractor.
Set the Right Scope & Know the End Buyer
In the Atlanta market right now, a large portion of the buyers in the $130,000 and below range are institutional investment funds. Owner occupant buyers are also a healthy segment of the market, and they want something that is very nice, but not overimproved. For pictures of each of these suggestions (https://www.facebook.com/RichlifeRealEstate)
- Exterior Paint was faded and peeling at soffits and fascia's, and the interior paint was very scuffed up and dirty. Painting gets huge return and makes such a large difference in curb appeal. Our Budget for painting was like $3,500
- Roof shingles had started to buckle, the grains were worn down quite a bit, and it was clear that this would provide concern even though it could have been repaired. $4,000 or gave us a new roof (we get great pricing).
- A solid middle grade carpet with 20 year warranty and Nike high end carpet pad was what an owner occupant would want and carpet budget should be $3,500 on a home this size.
- Granite Countertops help with appraisal more than just about anything else and if you use remnants in bathrooms then it's even more affordable. You can do a kitchen this size and three bathrooms for about $1,800.
- Custom Tiled Backsplash give the home a WOW factor for $1,200 or so.
- Tiled flooring also helps with appraisal and feels like a very nice upgrade $2700 for hall, foyer, three bathrooms, and a dining area is a great investment.
- New Lighting is one of the most cost effective updates, if you are spending $100 on labor to install a ceiling fan, it doesn't make sense to put up a $12 cheap ceiling fan when a $59 ceiling fan looks outstanding! Lighting budget $800.
- Used Stainless Steel Appliances $500 double door fridge $300 Gas Range/Oven. This really makes the home desirable and improves appraisal and marketability.
Many rookie rehabbers would have been tempted to put a new kitchen in, but cabnetry can be expensive, and the house wouldn't have sold for more, or sold more quickly given the market. Overrenovation just takes money out of your pocket. We could have used architectural shingles for $400 more, and that would have looked great, but wouldn't have sold the house for any more. The buyer discovered polybuteline plumbing during their inspection and we decided to do a $2,000 price reduction instead of spending $4,000-$6,000 in redoing the plumbing.
Know the Comps and Market Trends
We were able to make very wise decisions on doing this renovation from knowing the market trends, days on market, who our buyers were likely to be, percentage of list price that is received as well as comparable sales in the neighborhood. Working with an expert who can control costs of renovation, make sure they are done right and on time is so important. Additionally, buying the right property at the right market timing is huge!
If you need good contractors or would like to find investments like these The Rich Life Real Estate Team would love to help you! Reach us by phone at 404-718-9126 or visit our website www.richliferealestate.com. For more pictures of this home you can see the Rich LIfe Real Estate Radio Show Facebook fan Page: https://www.facebook.com/RichlifeRealEstate our show plays Saturdays on North Georgia's Newstalk AM 550 and FM 102.9.