FIXING HOUSES FOR MONEY
Ask yourself every now and then, what am I doing in real estate? Do I want properties that look good, or do I want properties that pay good? There must be no confusion about your goal.
One of my first recommendations, especially for new investors, is to sit down and plot out exactly how much money you’ll start getting back each month, once you become the owner of a property. Do this exercise before you buy – not afterwards
After doing fix-up for so many years. I must make a confession! Fixing is much more satisfying and rewarding to me than buying the newer sweet-smelling, more expensive houses, although I do own some now. Let me simply make this observation about newer houses: They provide an excellent vehicle to reduce excessive cash flow. High monthly mortgage payments can quickly eliminate the problem.
Knowledge
There are those who incorrectly believe that fixing houses is a job that only experienced carpenters or contractors can do. Nothing could be further from the truth. It matters very little who performs the physical fix-up work, so long as the right things get done. Owners doing their own fix-up work will only enjoy a money-saving advantage, if they fix the right things at the right time. Both are very important. As you shall learn, knowledge is what makes the big money.
Special Requirements?
As a general rule, no licenses are required by owners who fix up houses for themselves. However, if you do it for someone else, for example, as an employee or independent contractor – that’s different! It’s very likely you will need a license to be perfectly legal.
Having fix-up skills can certainly be an advantage because it’s one less thing you’ll need to learn about, but, having said that I’m gonna tell you something you should definitely underline – and never-ever forget BIG PAYDAYS DO NOT COME FROM FIX-UPSKILLS- THEY COME FROM REAL ESTATE SKILLS AND SPECIALIZED “HOW TO” KNOWLEDGE.
Remodel or Renovate?
I discovered there is no inexpensive method to turn older houses into new houses. Herein lies the most important difference between what I do and what remodelers and renovators do.
Often remodelers will replace entire plumbing systems with all new piping. Sometimes they have the entire house rewired. They tear out old flooring and replace floor joists and girders. They replace wood windows with new metal frame styles. Some will even jack a house up to level it. That means they must also fix all the cracks and often re-do the stucco exterior.
Don’t do fix-up this way. Unless money is no object. You’ll lose your shirt if you do.
Since older houses are not the same as newer ones, don’t try to make them so. Instead, try to capitalize on the marketable features not found in the modern day construction. Older houses quite often radiate charm – a homey feeling! High ceilings, woodwork, large porches, yard space, old windows (dressed up), evaporative cooling with separate heating, storage sheds and separate garages and more often than not, mature shrubs and trees. All these items can add to the charm of older buildings. Add a freshly painted white picket fence after everything else is cleaned and “spruced up.” You’ll have lots of customers – renters or buyers, depending on your investment plan.
What’s It Cost?
Since almost every problem can be patched-up, repaired or replaced by skilled mechanics, it becomes necessary to further qualify fix-up work in terms of the economics, “How much will it cost?”
This information will help you decide how much work is too much, and when it’s best to simply pass over the deal and move along to the next one. The fix-up-investor must be concerned with fixing for profits. Not just fixing. This is a very important concept – one you must never forget. The two worst mistakes for beginning fix up investors are OVER-FIXING and FIXING THE WRONG THINGS.
