Fixing When You’re Poor
I always begin my fix-up projects in the front yard. I’ve seen professional appraiser’s value identical houses as much as $10,000 lower because of plain old filth and junk on the property. In other words, a clean house is worth $10,000 more simply because the owner hauls away the trash and keeps the house looking nice. That’s lot of money for ordinary clean-up skills. Suppose it takes a whole week (40 hours) to haul away garbage and clean up a property. That’s $250 an hour, or nearly as
much as brain surgeon earns on his days off.
” … if you do it right, it will pay better than anything I know of.”
Most improvements should be justified on the basis of paying for themselves. Does it really need doing? I expect the payments to come from higher rents or bigger profits as my reward for doing the work. Fixing or changing things around purely on the basis of personal likes and dislikes will seldom provide a justifiable mark-Up. This happens to investors who charge forward without a plan. It also happens to folks who fall in love with an investment property. I advise you to be very careful and avoid these common pitfalls. Remember, fixing up dumpy, dirty houses is not glamorous work. But, if you do it right, it will pay you better than anything I know of.
General clean-up and fresh new paint will return an owner’s fix-up money about as fast as any improvement. It’s also the most important job in terms of what new owner investors should plan on doing first. The reason is simple. The general public (most people) associate value with looks. Therefore, an ugly property always looks worthless. The very same property cleaned up with sparkling new paint suddenly looks like it has much greater value. If you truly understand this concept and if you learn to apply the profit-making strategies discussed here, then you’re ready to start out today and become a very successful fix-up investor in a few short years.
There is no limit to the financial rewards that can be yours if you’ll develop and apply this practical economic advice. Creating “good looks” is the life blood of my personal fix-up strategy.
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. 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. The two worst mistakes for beginning fix-up investors are over-fixing and fixing the wrong things.
Many fix-up jobs return their costs quickly. Leading the list of “quick returners” are painting (inside and out), general cleaning, yard and landscape work, fencing, carpets, window coverings, modern faucet~, light fixtures and Formica counter tops In kitchens and baths. It’s not uncommon to get three or four dollars back for each fix-up dollar you spend. When you do, it will make you very rich.
Creating good looks is the life blood of my fix-up strategy.
Fixing for dollars primarily refers to sizzle items such as white picket fences, fresh paint, window coverings, ceiling fans, wall paper, new counter tops, floor coverings, planters, decorative porches or entrance doors, trees and shrubs, green lawns, new faucets, modern toilets and new shower enclosures.
I call these sizzle items because they are attractive and useful. They seldom have anything to do with code problems. These items have lots of customer appeal.
There is no inexpensive way to turn older houses into new houses. Herein lays the most important difference between what I do and what remodelers and renovators do. It is a very expensive difference.
Remodelers will replace entire plumbing or electrical systems. They tear out old flooring and replace floor joists and girders. They replace wood windows with new metal frames. Some will even jack a house up to level it which means fixing all the cracks and often redoing the stucco exterior. Don’t do fix-up this way. You’ll lose your shirt!
One quick word about location: don’t buy property where you’ll need an armored vehicle to drive through the neighborhood. You can find plenty of fixers in decent areas. Bad areas are simply not worth all the hassle. Save your energy for painting.
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