Increase home value

Residence, Property, House, Real EstateReal estate investors live and die by their ability to add value. With no extra value, there are no profits. This is true with any business, but what makes property such a wonderful business and a great investment, is the number of ways you can add value and cash in on big profits. Here are three ways you can add value to your possessions.
Upgrades and Repairs: OK, this is the obvious one and is the reason fix and flippers can earn money. Some repairs add a great deal more value than it costs to do. The more creative you are with the improvements, the more value you can add. By way of example, I have a customer that adds square footage to every house he buys. He really likes the inner city properties since they’re the hardest to add square footage. You either have to finish an unfinished basement, or add a second story. There is not typically enough land on the lot to add an addition by upping the foot print of their property. This client does a lot of basement finishes and”pop tops,” but where he’s made the most money is the cellar that is just 5 or 6 feet deep. He’ll go in and dig out the basement to a full 8 or 9 foot height and then finish it. Something most investors wouldn’t think of, so he is able to get the deal most other investors pass on. I have also seen some investors find homes that don’t really fit into a neighborhood and they make them fit. This could be restricted bedrooms or bathrooms or funky floor plans. All that can be changed. Clearly many cosmetic fixes like kitchens and bathrooms include a lot of value too. There is a whole lot more to it than this, but the idea is to get a property in its true’as is’ worth, (don’t over pay), and then add value with the repairs and upgrades.
Owner Finance: I love this one because it’s so easy to add value with very little to no work. You will have to wait to cash in on your own profits, but it is a way to boost a market significantly. You may also use this strategy to defer tax gains over a few years, rather than taking a major hit all in one year. When you’ve got a property available are a limited number of buyers for the home, although right now that pool of buyers seems pretty large. If you are able to increase the pool of buyers, then the demand for that one home increases, which forces the price to go up. Someone that cannot be eligible for an ordinary loan, restricting the supply of homes to choose from for that purchaser, will probably purchase your property. That also raises the price. You’re adding value by giving them the opportunity to own a house that they normally would not be able to own. For this value, you should be compensated with a higher cost and a decent interest rate on the profits, as you wait for the buyer to refinance and pay you off in full.
Shared Units: This is one area of property I have not dabbled in, but it is extremely inviting. The idea here is to sell your property to multiple buyers. You are seeing this a lot in resort cities. It is always a holiday or second home. Have you ever been to a time share presentation? They are pretty enticing aren’t they? About 13 years ago my ex wife and I were in Florida and got sucked into a time share sales pitch. We chose to go because they offered us free tickets to Disney. They were quite good at promoting the”idea” of the time share and had my ex spouse sold. She asked me to proceed with the deal, but I could not bring myself to do it. I advised her that I wasn’t comfortable with an emotional purchase and that we needed time to think it through. was my response. As we rode back to the hotel that afternoon, I started considering the math. Each unit can be sold to 52 distinct people because your purchase only gets you 1 week annually. Add that to the yearly maintenance fees and the numbers are staggering. I know people who have flipped time shares successfully, because you can get them for free or near free on Craigslist, but it is not an investment that I was interested in. With that said, I have considered doing a half or quarter share on a house in a ski town in Colorado. In this scenario, you are sharing a house with 1 to 3 other people so there is a ton more flexibility. You may use or rent out your weeks and you can be ensured valuable high demand weeks every year. It’s a way to get a second home without the full expense. 1/2 a share of a house will cost the buyer more than 1/2 of their fair market value. I have seen business plans from investors who would buy a house and quarter share it out. The idea was that after they improved the property and sold 3/4 of the house to 3 distinct buyers, they would own the previous 1/4 free and clear. Obviously this strategy will work best in areas where people want second homes. The downside is if there are any improvements or major difficulties. I can see there being disagreements, so this is something you would want, as a buyer, to work out with the rest of the owners in writing before you purchase.

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