Major structural renovations can increase livability, but generally aren’t good short-term investments
Remodeling can be a fantastic way to breathe life into an older home, but be careful about the type of work you choose to do.
According to Remodeling Magazine’s Cost versus Value report, the only midrange or high-end remodeling project that will recoup its costs is a steel front door replacement, which increases an average the average selling price of a home by a paltry $25. Everything else is a money-losing proposition, so if you’re hoping to dramatically increase your home’s value, look elsewhere. Remodeling is not a way to make a quick buck.
So why should you remodel? There are two very good reasons: to build the home of your dreams and to help your home stand out in a crowded market. The trick is understanding which is more important, because they don’t play well together.
Major structural remodeling (such as adding a bedroom or garage) can dramatically increase your home’s livability. It can add an office or workshop, make room for more storage, or prepare a house for visitors or children. Unfortunately, these enhancements are very specific, and your buyer’s idea of an “improvement” might be very different from yours. As an investment, structural improvements are usually a losing gamble, but if they help you love your home enough to keep it, they’re often well worth the money. Sample structural remodels include:
If you’re looking to make your home “pop” to prospective buyers, consider less expensive, more superficial remodeling that freshens the look of a home without making major decisions for the buyer. Adding a garage yields a 53.6 percent return and costs more than $90,000, while simply replacing a garage door costs only $3,545 and returns 69.8 percent. Likewise, a deep kitchen remodel is far more expensive and less profitable than a far cheaper refacing of cabinets, fixtures, and countertops.
If you really want to sell your home, do your best to put the property’s best foot forward, but save major changes for the home you plan to buy.
A college crowd can increase turnover and wear-and-tear.
There are plenty of reasons to purchase rental properties. They can provide steady, passive income when the housing market is slow, allowing you to sell only when conditions are right. They can allow first-time buyers to enter the market when they’re priced out at home, and are an excellent way to build equity in a retirement or vacation home.
Whatever your reason, if you’ve decided to buy a rental property, follow our five tips to make the process as smooth and economical as possible.
1. Do not expect a quick profit
If you have visions of flipping your rental property in just a few years, stop now. Historically, rental properties have been an excellent source of long-term income, but their resale prices are based more on income streams than spikes in home prices. This is particularly true of multi-unit dwellings, and is even more pronounced in a depressed market. There’s little debate that you will be able to sell your rental property at a tidy profit some day, but unless your primary focus is on building equity and earning passive income over time, you’re in the wrong part of the business.
2. Know your market
Generally speaking, you want to buy a rental property in the best neighborhood you can afford. An ideal neighborhood would have low crime, a population influx, and proximity to transportation, employment, and amenities. Of these, crime is the most important, as it has a direct impact on your tenants’ comfort level and potentially impacts the physical safety of your investment.
Even beyond statistics, the character of your neighborhood is important, as well. A 3-bedroom duplex will have faster turnover and receive more wear-and-tear in a college town than a sleepy family community. A high-end rental home in the suburbs might be a short-term fix while a couple searches for a purchase, but the same home in an urban area could be a long-term rental for a busy businessman.
Bad tenants will damage your property, run up maintenance bills, call you (or your management company) at odd hours, and leave you holding the bag for months of rent when they abandon your property. Good tenants provide a predictable revenue stream and respect your investment. Do not cut corners with due diligence when choosing a renter. Credit checks are important, but checking references is critical.
Once you find your perfect tenants, be open to working with them. Be flexible with improvements or changes they’d like to make to the property. If they’re going through hard times, a minor rent adjustment could be well worth the long-term payoff. In the end, you need the tenants as much as they need you.
5. Be prepared
Rental properties require a fairly substantial cash reserve, as well as other preparations. You’ll want to be able to cover several months of mortgage payments to address vacancies and payment processing time. Rental properties require a larger downpayment (often 25-30 percent) than evidential properties, so budget accordingly.
Buyers only get one first look at a property, and they don’t want to use their imagination. They assume the house they see is as good as it’s going to get. If you want your home to sell, step out of your comfort zone and think like a buyer. Here are three ways to help you turn your house into the home of someone else’s dreams. We’ve broken down each category into low-cost, “Basic” tips and tricks, and an “All-Out” blow-the-budget transformation. How far you take it is up to you. Continue reading →
Have a plan for reviewing purchase offers so you don’t let the best slip through your fingers.
You’ve worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You’ll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here’s a plan for evaluating offers. Continue reading →
Here’s how to clean up your credit so you get the least-expensive home loan possible.
Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that. Continue reading →
Your first home purchase is exciting, but it can also be stressful. Here are some tips to limit the trauma and help you find the home of your dreams the first time around.
The most important step in selecting a home is knowing how much you can spend. If you already use an electronic budgeting system, you’re ahead of the game. If not, track your expenses for the past several months to a year. Try to quantify the “gray areas” of cash withdrawals that disappear on small purchases. Now add up your current rent and other related expenses. If you’ve been saving money toward your down payment, note that, as well. Finally, ask yourself where you can tighten your belt with your existing discretionary purchases. This is the maximum amount you could pay per month. Now ask yourself if this is reasonable, given your current savings and possible expenses. Only you know the answer to that. When you’ve arrived at a comfortable number, write it down, and save your calculations. You’ll take this to the bank when you apply for loan preapproval. For now, you have an estimated payment you can use while shopping online. Continue reading →
By: G. M. Filisko
Published 2010-02-10 11:12:47
Working to get your home ship-shape for showings will increase its value and shorten your sales time.
Many buyers today want move-in-ready homes and will quickly eliminate an otherwise great home by focusing on a few visible flaws. Unless your home shines, you may endure showing after showing and open house after open house—and end up with a lower sales price. Before the first prospect walks through your door, consider some smart options for casting your home in its best light. Continue reading →
Consider before you ignore or outright refuse a very low purchase offer for your home. A counteroffer and negotiation could turn that low purchase offer into a sale.
When you receive a low offer on your house, the best response is to counter with a price you’re willing to accept.
You just received a purchase offer from someone who wants to buy your home. You’re excited and relieved, until you realize the purchase offer is much lower than your asking price. How should you respond? Set aside your emotions, focus on the facts, and prepare a counteroffer that keeps the buyers involved in the deal. Continue reading →
By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget.
Homeownership should make you feel safe and secure, and that includes financially. Be sure you can afford your home by calculating how much of a mortgage you can safely fit into your budget.
Instead of just taking out the biggest mortgage a lender qualifies you to borrow, consider how much you want to pay each month for housing based on your financial and personal goals. Continue reading →
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More Options
Major structural renovations can increase livability, but generally aren’t good short-term investments
A college crowd can increase turnover and wear-and-tear.
Buyers only get one first look at a property, and they don’t want to use their imagination. They assume the house they see is as good as it’s going to get. If you want your home to sell, step out of your comfort zone and think like a buyer. Here are three ways to help you turn your house into the home of someone else’s dreams. We’ve broken down each category into low-cost, “Basic” tips and tricks, and an “All-Out” blow-the-budget transformation. How far you take it is up to you.
By: G. M. Filisko
By: G. M. Filisko
By: G. M. Filisko
Your first home purchase is exciting, but it can also be stressful. Here are some tips to limit the trauma and help you find the home of your dreams the first time around.
By: G. M. Filisko
By: Marcie Geffner
By: G. M. Filisko
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