How to trans­form a fixer-up­per

South Florida Sun-Sentinel (Sunday) - - Featured Communities -

The real es­tate mar­ket will al­ways have its ups and downs, but real es­tate is an oft-prof­itable in­vest­ment. Real es­tate in­vestors do their in­vest­ing for var­i­ous rea­sons. Some see a house as a place to hang their hats for years and years, while oth­ers look at prop­er­ties as noth­ing more than in­vest­ments.

Buy­ing a home with the in­tent to fix it up and re­sell it is called a “fix and flip.” In such sit­u­a­tions, in­vestors buy homes at be­low-mar­ket prices be­fore re­fur­bish­ing the homes with the goal of re­coup­ing their ini­tial in­vest­ment and then some when the homes are ul­ti­mately put back on the mar­ket. Flip­ping has be­come pop­u­lar for both ex­pert re­mod­el­ers and novice in­vestors. Real­tyTrac®, the na­tion’s lead­ing source for com­pre­hen­sive hous­ing data, noted in its “Year-End and Q4 2015 U.S. Home Flip­ping” re­port that 5.5 per­cent of all sin­gle fam­ily home and condo sales dur­ing the year were flipped prop­er­ties. This marked an in­crease from the same time the pre­vi­ous year.

In­vest­ing in a fixer-up­per re­quires a leap of faith and a vi­sion of what the home can look like in the fu­ture. Turn­ing a real es­tate le­mon into lemon­ade re­quires cer­tain skills and a good mea­sure of pa­tience. The fol­low­ing are some guide­lines to get any­one started.

Don’t bite off more than you can chew. Make an hon­est assess­ment of your abil­i­ties and which ren­o­va­tions, if any, you can han­dle. If you are un­skilled or in­ex­pe­ri­enced work­ing with your hands, then it can be easy for an in­vest­ment prop­erty to quickly be­come a money pit. Be­fore pur­chas­ing a prop­erty, hire a trained home in­spec­tor to tour the home with you and point out all of the ar­eas that will need ren­o­va­tion. With this list, be­gin get­ting es­ti­mates on how much money the work will en­tail. De­ter­mine if this fits with your bud­get or not. You do not want to in­vest so much that it ex­ceeds what you could fea­si­bly re­coup when it comes time to sell.

Over­look cos­metic things when vis­it­ing prop­er­ties. Cos­metic is­sues in­clude all of the eas­ily re­place­able items in a home, such as car­pet­ing, ap­pli­ances, in­te­rior paint col­ors and cab­i­netry. Fo­cus on the bones of the house — the ar­chi­tec­tural in­tegrity and those lit­tle touches that you en­vi­sion hav­ing a “wow” fac­tor. Seek the help of ex­perts. Some flip­pers think they’ll save the most money by do­ing all of the work them­selves. This isn’t al­ways the case. Pro­fes­sional ar­chi­tects, de­sign­ers and con­trac­tors may help you save money. Con­trac­tors have an in­ti­mate knowl­edge of where to buy ma­te­ri­als and may be able to ne­go­ti­ate prices based on whole­sale or trade costs. In ad­di­tion, ex­perts can help you avoid com­mon pit­falls be­cause they’ve al­ready done this type of work time and again. It’s smart to rely on ex­pert ad­vice, even if it means in­vest­ing a lit­tle bit more.

Save money by do­ing some work your­self. While the pros may tackle the more com­plex parts of a given project, such as rewiring elec­tric­ity or chang­ing the foot­print of a home, you can still be in­volved. Ask to par­tic­i­pate in de­mo­li­tion, such as tak­ing down walls or re­mov­ing old ma­te­ri­als from the home. Such par­tic­i­pa­tion may be fun, and it can save you sub­stan­tial amounts of money on la­bor.

Rec­og­nize that not ev­ery­thing must be com­pletely re­done. Re­al­ize that, in some in­stances, a coat of paint and some new ac­cents may be all you need to trans­form a space. For ex­am­ple, if kitchen cab­i­nets are in good con­di­tion, see if they can be refaced or painted in­stead of re­placed en­tirely. In­stall new door pulls/han­dles to add vis­ual in­ter­est. Look for some ready-made items, such as book­shelves, in­stead of in­stalling cus­tom car­pen­try.

Think about what the buyer wants and not what you want. Ren­o­vate with an eye to­ward prospec­tive buy­ers’ needs. Keep things neu­tral and ac­com­mo­dat­ing. Re­search the lat­est trends to un­der­stand what buy­ers might be seek­ing in a home. You want po­ten­tial buy­ers to en­vi­sion them­selves mov­ing right in.

Ren­o­vat­ing a fixer-up­per takes time, but it can be a worth­while project, and one that can help any­one turn a profit in a boom­ing real es­tate mar­ket.

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