How you can increase property values
Investors in real estate get to live and die through their capability to add value. Without any extra value, there is no profit. This applies to any business but makes the real estate sector a good business and a good investment. These are the number of ways to add value and money to great benefits. Here are three ways to add value to your properties.
Updates and repairs: Okay, this is obvious and is the reason to fix it and the fins can make money. Some repairs add much more value than the costs to do. The more creative you are with the improvements; the more value you can add. For example, I have a client that adds square images to every home they buy. He really likes the properties of the center because they are the most difficult to add square images. You need to finish an unfinished basement or add a second story. There is usually no flooring in the lot to add an addition, increasing the footprint of the property. This customer does many finishes in the basement and “pop tops”, but where he earned the most money is the basement that is only 5 or 6 feet deep. He will enter and dig the basement to a total height of 8 or 9 feet and then finish it. Something that most investors would not think of, so it is able to get the deal that most investors go through. I’ve also seen some investors find homes that do not really fit into a neighborhood and make them suitable. This could be limited rooms or bathrooms or funky floor plans. All of this can be changed. Obviously, many cosmetic arrangements, like kitchens and bathrooms, also add a lot of value. There is much more than that, but the idea is to buy a property in its true value “as is” (do not pay more) and then add value with repairs and upgrades.
Financial: I love it because it is so easy to add value with very little or no work. You will need to wait to cash your profits, but it is a way to significantly increase the selling price. You can also use this strategy to differentiate tax profits over a few years instead of giving a great success in a year. When you have a property for sale, there are a limited number of buyers for the house, although at that time that group of buyers seems very large. If you can increase the group of buyers, the demand for that house increases, which forces the price to rise. Someone who cannot qualify for a common loan, limiting the supply of houses to choose for that buyer, will probably buy their property. This also increases the price. You are adding value, giving them the opportunity to own a home they would not normally be able to own. For that value, you must be compensated with a higher price and a decent interest rate on profits, while you expect the buyer to finance it again and pay it in full.
Shared Units: This is an area of real estate that I have not entered but is extremely attractive. 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 home or a second home. Have you been to a timeshare presentation? They are very attractive, are not they? In this scenario, you are sharing a home with 1 to 3 other people, so there is a ton of more flexibility. You can use or rent your weeks and you may have guaranteed valuable weeks of high demand per year. It is a way to get a second home without the total expense. From the seller’s point of view, it is a way to get more for the home. ½ part of a house will cost the buyer more than half of the fair market value. I have seen investor business plans that would buy a house and the quarter share. The idea was that after upgrading the property and sold ¾ of the house to 3 different buyers, they would be the last ¼ free and clear. Obviously, this strategy will work best in areas where people want second homes. The disadvantage is if there are major improvements or problems. I can see there are misunderstandings, so that is something that you would like, as a buyer, to work with all other owners in writing before buying.
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