A good friend of mine called me yesterday to continue a discussion we started about an abandoned home in his rural neighbourhood. Most of his neighbourhood lots are 1+ acres. The abandoned home sat on 5 acres and had a 20’ x 40’ shop next to the house. The 2,100 square foot home, the shop and the 5 acres just sold for $199,000!
There are plenty of good deals out there just like this one. If you’re interested in finding them, there are plenty of creative ways to go about that task. Just be careful because there seem to be more horror stories than fairy tails when it comes to successful home rehabs.
Well, here are 6 must do’s for anyone in the market for a home to rehab and sell, or for anyone with immediate plans to rehab a home they already have.
Limit your potential exposure: If you’re looking for a home to purchase and rehab, keep in mind that should you need financing, current lending guidelines limit financing to 70% to 80% for investment properties. This means that in addition to the money required for any updates and repairs, you’ll need a 20% to 25% cash down payment. Don’t forget to include 6 months of total payments (principal, interest, taxes and insurance) as verifiable reserves. Most likely the underwriter will require that much for each investment property you own. It’s probably best that you settle for properties with a maximum sales price of about 70% of the current appraised value. The property my friend and I were discussing was sold for about 72% of its value. But the necessary repairs would be minimal, so it was a great deal for the person who bought it.
Be conservative about what the home will be worth after affecting repairs: The correct industry lingo is After Repair Value (ARV). Our local real estate market is relatively steady, even still, changes regularly take place. It’s unwise to trust sales comparisons from over 6 months ago. Use sales within the past three months to establish the ARV. Also limit your search to one-half mile or less and only use home that are very close in size and share many of the same amenities. The local MLS will show the active listings and pending sales, but these are less effective comparisons and should be used discriminatively. There are plenty of REO (bank owned) sales and these should be included in your comparison to establish what the home will be worth after the repairs have been made.
Get multiple bids for the necessary repairs: Do yourself a favor and get at least three bids for the necessary repairs. If you don’t have a ready list of reliable and quality construction professional, contact several realtors you know and trust and ask them for referrals.
You’re the coach; build team consensus: America still has a capitalist economy and the contractors and real estate agents you hire want what you want. Maximum return on a minimum investment. Contractors want to do the least amount of work and make the greatest possible profit. Agents want to do as little marketing as possible and earn as much commission as possible. So why not commit to contractor bonuses if work is finished on time and under budget? Why not pay the agent their full commission and bonus them $1,000 if they sell the home by a specific (realistic) date? You’re the coach, so lead the team.
Plan for multiple exit strategies: In any building/remodelling project, there are always surprises, delays, added expenditures and the potential for disasters. Make sure you visit with your property insurance carrier and that you have correct coverage for your project. It’s also a good idea to have additional cash reserves to cover any cost overruns. What do you do if the property doesn’t sell? Make certain that the property cash flows well so you can rent it and hold onto the property.
Begin marketing the home for sale immediately: It’s never too early to begin letting everyone you know that you’ll soon have a home for sale. Tell your friends at the coffee shop, let your realtor friends know. Tell your friends at work. Attach a flyer to your email messages. Use Twitter, Facebook and LinkedIn. Take advantage of every available avenue to advertise your project. Market early, market daily, market often and market continuously!
Friday, September 11, 2009
Friday, September 4, 2009
Made in the Shade
Okay, I’m ready to laugh about it now, but only just now. And the time between now and the last wound suffered has been only a few days. So I may ramble on a bit, just to give you fair warning.
I’m smiling only because I’m amazed at how such a simple straightforward project as purchasing suitable coverings for two small windows, can turn into a screenplay for a new Pink Panther movie. Perhaps I’m overstating the case, but I swear that the comedy of errors surrounding this home improvement task would make Tim the Tool Man’s Top Ten List.
Our home faces the west, and well, since the sun sets in the west, we had to do something about the windows. We installed wood shades over the square windows and that worked well. But over the study window and over the front door were two “eyebrow” windows that would require specialized treatment.
My wife steadied the stepladder as I climbed, tape measure in hand to garner semi-precise dimensions for “close-enough-for-government-work” pricing estimates. These openings weren’t oversized, but every evening from late spring through early fall the brightness from the sun made it nearly impossible to navigate the kitchen; and the heat it generated made it unbearable in the study.
We took these measurements to several stores where blinds and shades are sold and one sales associate after another showed us our choices and tallied up the cost. I think it should be required for builders and sellers to disclose just how much it costs to properly treat an eyebrow window. At the prices we were quoted the word “treat” was inappropriate. I consulted my Thesaurus and found more appropriate terms such as, extravagance, indulgence, delicacy and luxury. This search led me to other words like doctor, nurse, cure and heal.
Our original thoughts were to have matching wood blinds custom cut. I’ve shopped for used cars that cost less. Seriously, are there people out there who actually pay thousands of dollars for something to hang in the window collecting dust? I guess so.
After several days browsing through decorating magazines, we settled on the idea of a shade. A window covering made of a durable material formed into cells that fan out from the bottom center of the window similar to a Chinese hand fan.
The look of this window treatment was pleasurable, but not extravagant, delightful but not luxuriant (yes, more Thesaurus words). And the price was more “general practitioner” than “specialist”. So we set the appointment for the installation expert to come and take exact measurements of our two windows.
Three days later I met the installer who not only took exact measurements, he also taped thick brown butcher paper over the openings and cut templates for the manufacturer to use when making the custom cuts. He left and the next day we returned to the store to place the order.
The sales associate called out the price and I actually smiled as I handed her my credit card. After consulting the computer she said, “Your shades should arrive in two weeks.” Okay, I thought, two more weeks of the heat and the sun spotlighting our dinner preparations. And we left the store.
Three weeks later (yes, that’s 3) the store called to let us know that our shades had arrived and that we needed to schedule installation. Four days later (yes, that’s 4) I met the installer who admitted, “I’ve never put these kind of shades in before. But hey, how hard can it be?”
Four hours later (yes, that’s another 4) the installer was leaving and I was on the phone with the store complaining that the shades for which we had waited an extra week were cut at least two inches short in all directions. How could that be? I mean the installer had cut an exact template of each window. I watched him do it myself.
We were assured that the re-order of our purchase would be made immediately and that we could expect delivery in three weeks.
Four weeks later (yes…) our new shades arrived. The installer came out five days later and we now have shades to cover the two eyebrow windows. The whole process required just over three months, numerous phone calls four installer visits and I now know why they call it window treatment. In the end, the windows get treated better than the customer.
I’m smiling only because I’m amazed at how such a simple straightforward project as purchasing suitable coverings for two small windows, can turn into a screenplay for a new Pink Panther movie. Perhaps I’m overstating the case, but I swear that the comedy of errors surrounding this home improvement task would make Tim the Tool Man’s Top Ten List.
Our home faces the west, and well, since the sun sets in the west, we had to do something about the windows. We installed wood shades over the square windows and that worked well. But over the study window and over the front door were two “eyebrow” windows that would require specialized treatment.
My wife steadied the stepladder as I climbed, tape measure in hand to garner semi-precise dimensions for “close-enough-for-government-work” pricing estimates. These openings weren’t oversized, but every evening from late spring through early fall the brightness from the sun made it nearly impossible to navigate the kitchen; and the heat it generated made it unbearable in the study.
We took these measurements to several stores where blinds and shades are sold and one sales associate after another showed us our choices and tallied up the cost. I think it should be required for builders and sellers to disclose just how much it costs to properly treat an eyebrow window. At the prices we were quoted the word “treat” was inappropriate. I consulted my Thesaurus and found more appropriate terms such as, extravagance, indulgence, delicacy and luxury. This search led me to other words like doctor, nurse, cure and heal.
Our original thoughts were to have matching wood blinds custom cut. I’ve shopped for used cars that cost less. Seriously, are there people out there who actually pay thousands of dollars for something to hang in the window collecting dust? I guess so.
After several days browsing through decorating magazines, we settled on the idea of a shade. A window covering made of a durable material formed into cells that fan out from the bottom center of the window similar to a Chinese hand fan.
The look of this window treatment was pleasurable, but not extravagant, delightful but not luxuriant (yes, more Thesaurus words). And the price was more “general practitioner” than “specialist”. So we set the appointment for the installation expert to come and take exact measurements of our two windows.
Three days later I met the installer who not only took exact measurements, he also taped thick brown butcher paper over the openings and cut templates for the manufacturer to use when making the custom cuts. He left and the next day we returned to the store to place the order.
The sales associate called out the price and I actually smiled as I handed her my credit card. After consulting the computer she said, “Your shades should arrive in two weeks.” Okay, I thought, two more weeks of the heat and the sun spotlighting our dinner preparations. And we left the store.
Three weeks later (yes, that’s 3) the store called to let us know that our shades had arrived and that we needed to schedule installation. Four days later (yes, that’s 4) I met the installer who admitted, “I’ve never put these kind of shades in before. But hey, how hard can it be?”
Four hours later (yes, that’s another 4) the installer was leaving and I was on the phone with the store complaining that the shades for which we had waited an extra week were cut at least two inches short in all directions. How could that be? I mean the installer had cut an exact template of each window. I watched him do it myself.
We were assured that the re-order of our purchase would be made immediately and that we could expect delivery in three weeks.
Four weeks later (yes…) our new shades arrived. The installer came out five days later and we now have shades to cover the two eyebrow windows. The whole process required just over three months, numerous phone calls four installer visits and I now know why they call it window treatment. In the end, the windows get treated better than the customer.
Friday, August 21, 2009
Sell Your Home in the Next 30 Days
It’s difficult to stay positive and motivated when your home has been on the market for over six months without a single solid purchase offer being made. If you’re in a situation like two of my neighbors who say, “I don’t really have to sell my home, but if someone offers full price, I’ll take it”, well, you can stop reading right now. This article is for those buyers who need to, have to, really want to sell their homes as quickly as possible.
I read a quote early this morning from one of my Facebook, friends (I can’t remember who it was). He said, “If you’re in hell don’t stop, keep moving.” That’s good advice for folks whose home has been on the market for what seems like forever. Realtors tell me the longer a home remains on the market the fewer inquiries that listing gets and the more frustrated sellers become. So if you think you’ve tried everything to sell your home, I have a few ideas that will hopefully stimulate your thinking and reenergize your efforts to get your house noticed.
Start with a fresh outlook: Invite someone from where you work to come and tour your home. The idea is to get someone who has never been to your home to come see your home as if they were house hunting. If you elect to use this idea, put your “thick skin” on. Watch their facial expressions and listen to the tone and inflection of their comments. You can learn just as much from what they say as you can from they way in which they say it.
Change the price: Before changing the price, take the time to tour other homes in your neighborhood to make an honest comparison. Most of us will have a difficult time remaining objective, so consider having that friend from work tour these homes with you. After visiting other homes check your price. If it’s too high, lower it. If it’s too low, raise it. If it’s just right, then leave it alone. The reason I include the option to raise your price is that common wisdom is that if a home hasn’t been shown, then perhaps the price needs to be dropped. When the price of a home listed on the MLS is changed it is picked up on more Realtor searches. The idea here is to generate interest in your home.
Hold a neighborhood open house: Use your neighborhood’s newsletter, website, or just mail postcards to your neighborhood and invite everyone over for a weeknight open house. Provide light snacks and hand out flyers to everyone who drops in. Most neighbors are curious about what your home looks like on the inside and many will come. Consider offering a “finder’s fee” for information leading to a buyer for your home.
Make use of Twitter: There are 170 characters in every Twitter post and with careful planning you can maximize each letter. Consider the following: “We’re moving and can’t take out house with us. Know anyone wanting a great place to live?” “Great home, new carpet, fresh paint inside and out, leaving great karma behind, no extra charge.” “$500 finder’s fee for sending me a buyer for my home” Ask your friends to use a few of their Twitter posts to help you sell your home. You might even make the finder’s fee available to them as well.
Have a candid talk with your Realtor: If your home has been on the market for several months and you’re getting limited or not interest, it’s time to have a candid talk with your realtor. But before jumping to the conclusion that they haven’t been doing their job I encourage you to take the opposite approach and listen to the way they answer this one simple question. “If this was your home and you needed to sell it, what would you do differently than what we have already done?” Be sure that you have both ears on and a notepad; and resolve beforehand that you will not take any of their suggestions as a personal attack.
The idea is to do something different that what you have already been doing. Mixing things up can be a great way to re-energize everyone’s activity and hopefully attract that buyer within the next thirty days.
I read a quote early this morning from one of my Facebook, friends (I can’t remember who it was). He said, “If you’re in hell don’t stop, keep moving.” That’s good advice for folks whose home has been on the market for what seems like forever. Realtors tell me the longer a home remains on the market the fewer inquiries that listing gets and the more frustrated sellers become. So if you think you’ve tried everything to sell your home, I have a few ideas that will hopefully stimulate your thinking and reenergize your efforts to get your house noticed.
Start with a fresh outlook: Invite someone from where you work to come and tour your home. The idea is to get someone who has never been to your home to come see your home as if they were house hunting. If you elect to use this idea, put your “thick skin” on. Watch their facial expressions and listen to the tone and inflection of their comments. You can learn just as much from what they say as you can from they way in which they say it.
Change the price: Before changing the price, take the time to tour other homes in your neighborhood to make an honest comparison. Most of us will have a difficult time remaining objective, so consider having that friend from work tour these homes with you. After visiting other homes check your price. If it’s too high, lower it. If it’s too low, raise it. If it’s just right, then leave it alone. The reason I include the option to raise your price is that common wisdom is that if a home hasn’t been shown, then perhaps the price needs to be dropped. When the price of a home listed on the MLS is changed it is picked up on more Realtor searches. The idea here is to generate interest in your home.
Hold a neighborhood open house: Use your neighborhood’s newsletter, website, or just mail postcards to your neighborhood and invite everyone over for a weeknight open house. Provide light snacks and hand out flyers to everyone who drops in. Most neighbors are curious about what your home looks like on the inside and many will come. Consider offering a “finder’s fee” for information leading to a buyer for your home.
Make use of Twitter: There are 170 characters in every Twitter post and with careful planning you can maximize each letter. Consider the following: “We’re moving and can’t take out house with us. Know anyone wanting a great place to live?” “Great home, new carpet, fresh paint inside and out, leaving great karma behind, no extra charge.” “$500 finder’s fee for sending me a buyer for my home” Ask your friends to use a few of their Twitter posts to help you sell your home. You might even make the finder’s fee available to them as well.
Have a candid talk with your Realtor: If your home has been on the market for several months and you’re getting limited or not interest, it’s time to have a candid talk with your realtor. But before jumping to the conclusion that they haven’t been doing their job I encourage you to take the opposite approach and listen to the way they answer this one simple question. “If this was your home and you needed to sell it, what would you do differently than what we have already done?” Be sure that you have both ears on and a notepad; and resolve beforehand that you will not take any of their suggestions as a personal attack.
The idea is to do something different that what you have already been doing. Mixing things up can be a great way to re-energize everyone’s activity and hopefully attract that buyer within the next thirty days.
Subscribe to:
Posts (Atom)
