"makeovers"
The type of Rehabbing that I would like to do is "makeovers" turning an allright home to a pretty home. ie. concentrating on the landscaping and appearence of the home, touching up everything in the interior, adding a room or two. Is this a good approach in this industry
[addsig]
"makeovers" as you say is a good idea, however, make sure your market area will hold such improvements.
Here is a appreviated quote from your post:
"The type of Rehabbing that I would like to do is "makeovers" turning an allright home to a pretty home. ie. ... touching up everything in the interior, adding a room or two. Is this a good approach in this industry."
"Adding a room or two" ... is this a little more than a "makeover"? Would this be more of a construction job?
Maybe another word needs to be used between "makeover, ________, "rehab".
Maybe "makeover addition"?
In all seriousness ... excellent idea and plan !! All that will add value and more desirable to buyers.
Take a 2 bedroom home with both living and family rooms, convert the family room into the 3rd bedroom. A home with laundry area in garage ... when extra space in house, build a new laundry room.
Cheryl Lopez
[ Edited by cheryllopez on Date 07/10/2004 ]
Does anyone else have any questions/ suggestions on what I would like to do? Is there a national orginization for realtors?
[addsig]
I would like to do more to the house then just flooring and carpet ie. changing asphalt roofs to metal roofs, vinyl siding, adding a sunroom/ exercise area, clean up laundry area, focus on the landscaping etc. I wanted a signature style in the industry. Revolving around the first impression (which is landscaping and outside appearance)
[addsig]
Mario -
Maybe I can add my two bits to what's already been said... May I suggest a book to you? Buy It, Fix It,Sell It, Profit! by Kevin Myers. That may give you some better concrete ideas on where to start. You seem to have a grasp on what you want to do. May I pose a couple of thoughts for your consideration?
1) Your "signature style" won't buy much in the housing market. Unlike the fashion industry, or even interior design, people don't change homes often enough to look for a "Mario" house.
2) Worry more about economics and less about style. You want the home to appeal to the broadest possible base of consumers - NOT just one eclectic group. The more people interested in the house, the quicker and higher dollar it sells for. What interests you is less important than what interests the BIGGEST NUMBER of buyers.
Taking the above to it's logical conclusion - rehabbing a house and adding some features can be profitable. ABSOLUTELY. That said, a reasonably sharp landscape/curb appeal, bright but neutrally colored kitchen, and bright neutral colored baths with good workmanship through out beats all of the crafty stuff. Every time.
All the best in your endeavors,
Jeff
Quote:
On 2004-07-13 19:13, jblackwell wrote:
Mario -
1) Unlike the fashion industry, or even interior design, people don't change homes often enough to look for a "Mario" house.
2) You want the home to appeal to the broadest possible base of consumers - NOT just one eclectic group. The more people interested in the house, the quicker and higher dollar it sells for. What interests you is less important than what interests the BIGGEST NUMBER of buyers.
As Berreta would say :"You can take that to the bank!"
Well said.
I just want to add that what you are really describing as what you want to do works much better in very high end market - the $750,000 to 2,500,000. Builders do this in these types of spec homes, they may purchase an existing ranch in the right neighborhood for $400k and scrape it off and build a signature home.
In the rehab biz, making affordable housing is usually more profitable, people are concerned with living condtions they want the steak not the sizzle.
I will devil's-advocate the devil's-advocators...just for fun.
If you have the talent....why not go for creativity? Just don't lose track of the financials.
I doubt you'd do worse than the conventional approach. You'd probably have more fun and sense of achievement.
Just don't lose track of the financials.
Just don't lose track of the financials.
Just don't lose track of the financials.
Thanks Jeff, I want to learn anything and everything that I can until I reach multi-millionare status thank you for all of your inquires. All suggestiions help
[addsig]
I hate jumping on the side of the naysayers, but this post reminds me of a rehab I did with my Dad last year.
As soon as we began work, he kept insisting that the one thing the place needed was a chandelier.
"Keep it simple and generic, Dad," I argued. "We want to market this place to everyone, not just blue-haired retirees." But he wouldn't let up.
"Look, if I'm paying $300K for a condo, there had better be a damn chandelier." Sure it's warped logic, but it didn't stop him from repeating it day after day.
Finally, on the last day of work, he showed up with a chandelier. I couldn't believe it. "Here it is," he said. "This is what will sell the place. It's the focal point, the centerpiece."
By that point, I was done arguing. He'd worn me down. I threw up my hands and said, "Okay, you win, Mr. Chandelier Lover. Go nuts."
The next day, the realtor shows up. As soon as he walks into the dining room, he says, "Place looks fantastic, but you gotta lose the chandelier. This isn't 1940."
My Dad was crushed.
Point of the story is, although my Dad meant well, he didn't understand that by customizing a home to a particular taste or style you inevitably alienate certain buyers.
And when I'm trying to sell a place quickly, I need all the interest I can get.
Good luck.
[addsig]
monk,
what you say makes sense, but personal things like that I want to leave out. I want the house plain on the inside letting the buyer imagine what they want to decorate the house with, but I want to concentrate on the landscape and other things that will "wow" potential buyers. Thanks for the input.
[addsig]
Landscaping that wows buyers is commonly referred to as curb appeal. It is a step in the right direction to make the house as appealling as possible from the street. You would be surprised how many times people will pull up to a house on their list to look at and not get out of the car because the outside is just not appealing. An attractive and appealing front yard is key to getting people out of the car and into the home, however the rest of the stuff you are talking about is all over the board, I don't know where it is coming from but it seems like you are mixing together a ton of ideas taken from sources that aren't necessarily going to do anything but take money out of your pocket or worst case lose you money, because houses that are just not "pretty" don't sell for very much of a discount.
A statement like my investment strategy is: "I want to make an alright home into a pretty home", just cries out that you are going to learn some expensive lessons on your initial deals.
On the other end with "adding a room or two" with additions is about as far on the opposite end of a strategy like "making a house pretty". Very, very, very few people in this business do additions. Once you find out how much time and especially money is involved you quickly realize that the return is most of the time break even, some of the time would make you money, and some of the time lose you money. Be very careful pursuing that strategy unless you have some deep pockets and can weather some loser deals until you figure out the business of rehabbing.
There are so many pitfalls to your strategy please take your time and talk to other investors and get some real world examples from them.
You won't be the first person to finish a basement and later find out that square footage under grade doesn't count towards living space, or one of the hundreds of other "seemed like a great idea at the time ideas."
These are some examples of things that I would like to do on the interior of a home.
Deck
working on bathroom
window replacement
working on family room
working on master bed room
working on kitchen
maybe add another fireplace
and that’s about all the work I would like to perform on the interior.
If you feel that these rehabs are extreme let me know. Again, I value all of your inputs.
[addsig]
What your talking about is "rehabbing" plain and simple.. Get educated and get the book by Kevin Myers it is definitive..
The landscaping is important and you can do a lot with sweat and little money. As for signature, lose the ego. Go for the $$ if a signature pays then go for it!
Decima says his signature is a white picket fence. These may pay off in marketability..
remeber, if anyone can do it then there is likely no money in it because the competition is fierce.
Rehab is a little tougher because it requires some knowledge even to general a project, deep enough pockets to carry the home and repairs for min 6 months (though we all hope sooner turnaround) and a lot of work..
I rushed into one about 10 years ago and lost my butt doing the cutesy things like Parket floors, colonial doors, track lighting etc. Read the book! and then get the one that Fixer Jay wrote and you will pay for them a thousand times over..
[addsig]
I herd adding a fire place triples the value and I am serious a friend of mine says he does fireplaces for about 7k why wouldn’t I spend seven if it adds a tremendous amount of value.
[addsig]
Yeah you are right, since adding one will add $21,000 to the value of the house according to what you have "heard", why stop at one? If I was you I would add 10 of them. 10 x $21,000 = $210,000 added value. Buy a $200,000 house, add 10 fireplaces and you double the value of the house!
Sweet. Why didn't I think of that.
You better do some hard and long research on ROI for remodelling or you are gauranteed to lose everything you own.
Rehabinator,
I like the fact that you have a strong opinion so what would you suggest get rehabbed in every home if you had 100k-125k to spend?
[addsig]
Hi mderonsle,
There has been a lot of great advice on this post. It looks like you are trying to approach this market from a unique perspective, to add some details that other rehabbers don't usually spend the time on in an effort to raise the value to a higher level. There has been a lot of caution against certain ideas that may not raise the value as much as you think. I think a great strategy would be to meet with a couple of realtors, look at some prospective properties with them and get some solid advice from them as to what the market will bear and what truly sells a home. I have gotten great advice from realtors who invest themselves and know what the key areas to address are and the areas not to spend your time on. Their advice is free and highly knowledgable. Good luck!
It sound like you really want to be a builder not a remodeler. To must want to maximize profit and do quality work -don't fall in love with the product. Bring the house up to the neighborhood norm. as far as features but that's it. Price the house for $21k more and the include a fireplace if it will seal the deal, if not you have a $21k leeway built in (maybe they'd rather have a in ground pool). spend money on kitchen and bath up dates not high end just good, and good paint. the idea is to give them a canvas that THEY can work on, buy, fix, make money and on to the next , good luck
Way back in the early 50's out here in LaLa Land.
We had a very nice lower working class area where all the mechanics and the drivers for Pacific Electric lived. Then one day I started buying up houses with very limited capital. I would move in and work on the house and in 60 days be finished. Fold my tent and move on. Sometimes I only painted the front. Did the door in contrast heavy color. Green shutters. A coach lamp. Fixed up the lawn planted flowers already in bloom. Played a little music, opened the door. Put the bread in the oven to bake and the brass kick plate on the door a great big brass knocker and I usualy sold in one to two days. It got so I never closed out the titles. I kept the search open so I could get a discount.
Mostly I made one big change. I wacked out the interior and created a "Great Room" Kitchen at one end, counter or small eating table then living room and then entertainment room at the far end. No big deal mostly non bearing walls and in Calif. the houses I worked on were little cheapies and everything came down with a few wacks and then up the drywall undercoat and top it out.
Now the truth. I was riding the wave of change and did not know it. The Car Barn was going and the mechanics and drivers too. Who was moving in were semi creative wanna be creative types. Young men of indiferent gender what in Japanese is called Oh Kamma San. My buyers were very creative interesting men 90 percent gay and the other 10% on the cusp or working on the closet door. I could not finish them fast enough.
It was just me cause I had a day job at a Mortgage Co. God I moved so often I was thinking of changing my name to Adams and start to tell fortunes. I was your Gypsy for sure.
The Moral: I thought I was a genius, god could I fix up and sell I had the magic touch. But in reality it was the change from nice square working class to very fey highly interesting undetermined gender. Mostly effeminate very presentable young men with an occasional lady who parked her 18 wheeler down the street.
Yes you guessed it this was West Hollywood in 1954 to 1959. It was the time of the great change. Straight to Gay.
So take no bows and do not pat yourself on the back. Sometimes it is just a biggy change occuring around you. I was so square I was unaware. Well allright, I was Stupid!
Cheers Lucius 8-) 8-) 8-)
Quote:
so what would you suggest get rehabbed in every home if you had 100k-125k to spend?
Your question makes no sense. You don't set a budget of 100-125k to spend on every house just because you have the money to spend.
The more money you pour into a house does not equate to increasing the price it will sell for.
What gets rehabbed in a home depends on two big factors - what are the features and conditions of the other houses in the neighborhood and how far away from those features and conditions is the house you are rehabbing.
In a neighborhood full of $100,000 3/2 ranches with single car garages. With your theory I would just pour money into it, adding fireplaces, a pool, expand the garage to a 5 car garage, build a second story, finish the basement, add a wine cellar. When I'm done I have spent another $200,000 so the house must be worth $300,000. I put it on the market and guess what happens? Everybody who is forced to look for a $100,000 house because of their financial condition can't afford to pay $300,000 for this house and everybody who can pay $300,000 for this house doesn't want to live in the neighborhood it is sitting in, which is full of crack dealers and a crappy school system. For $300,000 they buy a nice house in a $300,000 neighborhood.
The reality most of us have to work with and what you for some reason think you can avoid is you rehab to the condition of the neighborhood, maybe just a bit nicer, anything over that is money thrown away that will not be recovered.
Every good sized realestate market has segments, for every $10,000 - $25,000 more, you jump from neighborhood to neighborhood with amenities, features and locations that are equal to that increase.
Your theory of "If I built it, they will come." works in the movies, what it equates to in realestate is: "If I over build it, I will eat it."
mderonsle,
1)Lufos and others point out here that you must either be really lucky to haphazardly do what you suggest, or you must know your housing market and what is happening there very well, or you will lose money.
2)I don't think that any of us would really disagree with doing cosmetic touch-ups to a rehab, however there is a "process" for this, and an associated, caluculated risk. Your market must support your work and even more importantly your rehab "buy" must leave you with enough margin to substantiate any such touch-ups, remodels, or upgrades and still leave you with the profit you anticipated making when you bought.
3)As a rehabber myself, I can definitely speak with experience on the importance of cosmetic touches. In the rehab arena I consider myself a detailer more than anything. I determine my budget for more costly contractor upgrades, additions etc and budget for any other things I would possiblly "like'" to do to a property from the first time I see it (if I'm interested). If the numbers don't add up, I don't do the deal. Or I might do minimal repairs and simply wholesale it to another investor.
4)I understand that your list is made up of some things that you would be willing to do or have thought about doing on homes in your area. However, every home and deal is different. Your primary goal regardless should be in making the necessary improvements to the home that will make it more marketable at a higher price and marketable to a broader range of clients.
SG
I think all this is a little beyond where you are at at this stage, but, if you cannot forsee all the potantial problems then you are more likely to make poor purchasing decisions, invest too much and break-even, or even worse lose money on your first deals.
Another important point here is to try and position your end sales price in a gap that is most affordable and attractive to the majority of buyers in your market. In other words, for example here in my market, there are many mediocre homes in the 110-125 sales range. Not everyone wants to live in an old deteriorated home just because it is reasonable. They might keep renting instead. But, they cannot afford or their credit or income will not withstand the jump to the 155K range. So if purchase wholesale, or foreclosure, or buyowner or whatever around 80K-90K, invest for necessities and do a few touch-ups to end with a sales price around 125-140 range (in the gap) I am attracting buyers all day long.
SG
Go to my earlier post and spend $30 on the books and get an education the easy and cheap way vs the hard way. A newbie and his (or her) money are soon parted...
I can understand a creative bent, I suffer from that at times. As to fireplaces, I don't think that there is anything that has even a 100% return on your investment for its own sake. Minor kitchen remodel is 94% return on dollar and that is about the best one according to the studies. Study your market and then rehab accordingly, or get with an investor like me in your area that will let you fund the deal for a percentage and will teach you how to do it (read the books!). You will probably find him in your local RE club meeting. Get some mentoring and save thousands on the learning curve.
[addsig]
Here is something to help you out.
PROJECT TYPE AVG. COST RESALE %
Minor Kitchen Remodel
Reface cabinets, countertops, floors, cabinet fronts, oven, cooktop, paint.
$14,872 $13,434 90%
Bathroom Addition
6'x8' full bath in existing house, tub/shower, lighting, mirror.
$14,438 $14,011 97%
Bathroom Remodel
5'x9', new tub/shower, toilet, sink, fixtures, tile floor/shower, lighting, mirror. $9,911 $7,092 72%
Family Room Addition
16' X 25' w/ crawl space, hardwood floors, 180 sq. ft of glass, use existing HVAC. $47,824 $37,135 78%
Basement Finish
800 sq. ft family room w/ wet bar, 5'x8' full bath, tile floor/shower, 12 'x 12' room. $39,765 $30,941 78%
Two-story Addition
24' x 16' w/ crawl space, family room, second floor mster suite w/ bath, carpet.
$67,296 $45,434 66%
Master Bedroom Addition
24'x16' w/ crawl space, walk-in closet, mstr bath-dressing, jacuzzi, tile floor/shwr $64,296 $42,148 66%
Sunroom
200 sq. ft., crawl space, alum. frame ext. insulated galss, insulation, ceiling fan. $27,120 $16,994 63%
I am a huge fan of doing 2 things:
Trash-out.
Cleaning Crew.
If I can't buy for a price where I can do these 2 things and make a decent profit,
I will usually pass on the deal.
Of course there are exceptions, but don't just throw money at a deal.
Can you just buy a house for 400k, spend 100k on upgrades and sell for $600? Maybe, maybe not. It would help I think if your handle was 'The-Rehabinator' .
i do best with my rehabbs. by keeping them simple. clean, fresh paint, fresh carpet, ect. i don't do any thing elabroate because the things i like others may not. i go with the tried and true. basic earth tone colors. if its clean thats the real ticket for appeal..........kenmax
Thank you for your responses a lot of you may think that I want to purchase low income houses in low neighborhoods and try to rehab them, but I actually want to only work in high end suburban neighborhoods across the country finding houses under the median and try to maximize in that neighborhood not going overboard. I thank you for your responses and appreciate them.
[addsig]
[ Edited by The-Rehabinator on Date 07/26/2004 ]