Thursday, March 19, 2015

WAIT! Before You Renovate

Conventional wisdom says that any home renovation is good when planning to put a house on the market. But in a market where renovation costs are rising steadily while house values are only inching up, what should the smart homeowner choose?

Studies show that some remodeling projects are a better investment than others, depending on where you live and what is trending. According to Remodeling Magazine's 2015 Cost vs. Value Report, there are five replacement projects which make the greatest percentage impact on the value of your home this year.



Roofing


Roof replacement tops this year’s list at 5.9% as compared to 2014 values at an average cost of approximately $8,000. Typically roof replacement includes removal of the old roof and installing new shingles with underlayment, flashing, galvanized drip edges and trim. Tile roofs are generally double the price.



Your actual costs may vary, depending on where you live. For example, if you are in the Pacific region (CA, OR, WA, AK), you will pay 18% more than the National Average. If you are in the West South Central (TX, LA, OK, AK), you will pay 16% less than the National Average. 

Informed buyers probably look at the roof before anything else. A roof protects the house from ice, snow, rain, and other weather elements. Buyers know that a leaking roof will cause damage to the inside of the house.




Garage Doors


The garage door is one of the largest elements easily visible on a house and is usually one of the first things a buyer will see. It is an important element for curb appeal and can be a beautiful accent to your house.


Garage doors come in four basic types: They may roll up, swing out, swing up, or slide to the side. The cost to install a new garage door will vary depending on style and material, but average around $1,150. This cost generally includes the new door, galvanized steel tracks, rollers or hinges, and removal and disposal of the existing door and tracks. 

A quick tip: if you are replacing a damaged door with the same style, you may wish to keep undamaged panels to offer as replacement parts to your buyers.



Steel Entry Door


Third on the list and least expensive of this year’s top five is the 20 gauge steel door. As more people become concerned about security, this feature will be a good selling point. This cost-to-value project has an average price of $900 depending on the style (sidelites not included), but surprisingly has the highest resale rating. This project includes the new door unit, jambs and threshold with composite stop.



Vinyl Siding


Vinyl siding replacement is one of the more expensive home renovations. However, new siding and trim can transform a house from disaster to a dream. It will increase resale value both through visual appeal, as well as through improved weatherproofing and energy efficiency. Depending on your location and size of your house, siding installation usually costs somewhere between $5,600 and $8,000.




Fiberglass Entry Door


A fiberglass door would be another good option to update the look of the entry.  They are durable - resisting denting, splitting, cracking and warping.  At a cost of about $600 to $1000 for a door without sidelites, replacing an entry door with a fiberglass door increases value of 72% over 2014. The replacement process involves removing the existing door and jambs and mounting the new door unit and jambs along with exterior trim.





Projects to Avoid in 2015


The trends for desired renovation projects change from year to year. It is important to focus on the changes buyers want. According to the recent study, the following should not be done in an attempt to increase a house’s value.


Installing a Back-Up Generator



Popular after severe winters, hurricanes or other natural disasters, last year's biggest cost-to-value item is now at the bottom of the list at -11.3%.







Second Story Addition


Some property owners add a second story to their house. It is hard to imagine that this expensive addition was ever popular to increase cost to value since two story houses generally take longer to sell! It now has an 11% drop in its cost-to-value ratio.




Composite Deck Addition



The popularity of this wood-alternative decking has also fallen in cost to value by 9.5%.










If you are moving into a new house, any of these projects might be a worthy choice given the right home and the right conditions. However, if you are renovating to get the most money out of your house, compare other houses in your neighborhood and consider the top five trending projects.

Remember, if you don’t have the money to renovate, or you need to sell your house fast, none of this work is necessary! You can still sell your house as it is.




Next week we will take a look at the spring market.

So thanks for reading my post. I'm so glad you're here! 

And I really look forward to getting into more great stuff in future posts -- so that you can Turn Your House To $OLD!

Feel free to ask me any questions through the contact info below. I would be very happy to help.



Lynda  623-335-2662

Write to Turn My House To Sold

Turn My House To Sold on Facebook

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Article Sources:

Lynda Bathory

Sunday, March 8, 2015

AS SEEN ON TV!

Most people have seen, or at least know about, those TV shows where real estate investors buy those houses in horrible condition and fix them up for huge profit. They show houses in Massachusetts, Nevada, Texas and California, amongst other places. What viewers don’t often realize is that these shows really just tell stories that are dramatic and are meant to entertain the audience.


The stories revolve around the purchase, rehab and sale of a beautiful home that was once a rundown shack. In most cases, these houses are filled with surprise disasters and are completely redone in record time to end the show with a spectacular result.


WELL…THAT IS TV. It’s fiction or at the very least, extremely edited “FACT.”

Back to reality…

If a house is severely distressed, like the ones on TV, meaning that there is some major problem like a structural defect, mold, severe damage, missing plumbing or fire damage, conventional lenders are not going to take a mortgage on it if it is not habitable. This would mean that a buyer would have to pay all cash for the property. For most buyers who want to live there and work on the repairs over time this may not be possible – or even practical. It is currently unlivable and it will cost too much money to get the house in a habitable state right away.


The Truth About Rehabs


This is where the big issue with those TV shows rears its ugly head. If a person is watching these shows and thinking that they are being educated on renovations, they may be in for a surprise. They may not realize that planning the work, finding contractors, getting permits and having the work done in the proper order to get an inspection on these damaged properties is NOT as easy as it seems on TV.

TV likes to give the impression that the work can be done in a few weeks. In reality, these shows are typically filmed over several months. There are often delays in construction, hidden problems or mistakes and cost over runs when projects get bigger or mistakes are made. Sometimes it really takes weeks to get a permit or inspection from the city.

Episodes are “cast” and planned in advance. It is unlikely the shows team hasn't seen the property before “buying” it. It's just more dramatic to seem surprised. All the “workers” have agreed to do the show.

Sometimes when they show the “costs” and “profits” at the end, they don’t explain that products or services were free or rebated in exchange for mentioning company names, or advertising materials that were used.

For the average person watching clever editing, it may seem like this is a fast and relatively easy process. This is rarely true.

Good Fast Cheap!


There is an old saying when it comes to the trades: “Good, fast, cheap. Pick any two!”

Meaning that if it is good quality and done quickly, it will be expensive. If it is fast and cheap, it probably won’t be good. If it is good and cheap, it won’t be fast (probably because they are in great demand!)


Everyone that has ever had work done on a home knows that good trade’s people are busy. The ones you probably won’t want to hire are the ones that are easily available! If you would like to try this out to test my theory, pick three painters, cabinet fitters, tile installers – or whatever trade-  and ask them come to do an estimate on work in your home! Find out how much, when and how long, and look at examples of their previous work.

I would love to know your results!




What is a severely distressed home owner to do?


So, if rehabbing is costly and complicated and takes time, what is an owner to do if they have a severely distressed property?

It is possible to fix it – without question. The big question is...

Should you be the one to do it?

It takes a lot of time, effort and money. If you are a trade’s person or professional rehabber, this may be the project for you! However, if you have another career, or are responsible for your family, or have some other obligation, then a project like this may be unwelcome or even overwhelming.

If a house has such a great problem -or several problems- that it can’t be lived in, the best solution might be to turn to a real estate investor.

When a real life property owner is approached by one of these investors, because of these TV shows, the owner suspects that the investor/ buyer is going to make a huge profit. As a result, owners are sometimes offended by the offers that these investors put forward.

When rehabbers make an offer on this type of property, they first look at the real estate market to see how much houses in good condition are selling for. Then they subtract the labor and materials of the necessary repair work. They remove holding costs (loan payments, utilities and insurance) and realtor's commission.

Then they make their offer.

This rehab cost is what makes the offer seem so low.

Often the distressed property owner does not have a good understanding of this process. They see how much a neighbor’s nice house sold for and think they are being cheated. Because of this, a lot of people have a distrust of real estate investors.

The Truth about Real Estate Investors


Most investors are just regular people that have a different type of profession.

When a rehabber (or “fix and flipper”) buys a distressed property, they are taking a chance that they have seen everything that is wrong with the property. Sometimes when they start the work, they find hidden problems. Damage may be hidden behind walls or flooring. Something may not have previously been repaired in a professional way and may not have the proper city permits. An old leak may mean that a lot of wood in the walls or floor is rotten, or there may be hidden mold. Carpeting may hide a foundation problem. There may be undiscovered pest problems like termites.



The professional rehabber is willing to take on these risks and costs of a severely distressed house. Their experience guides them to determine how long the project will take and how much money will be needed. They tend to borrow money from private sources to pay the cost of buying, fixing and utilities and they pay interest on the loan.

Their “job” for the next few months will be to see the project through. The longer it takes, the more they have to pay. Once the property is sold, the contractors, materials and utilities are paid, the real estate agent gets their fee, and the private lender gets their principal and interest.
Whatever is left goes to the rehabber. If they were successful, it will be a good amount. If there were a lot of problems, they may break even or possibly take a loss. Because they get paid last.

Now THAT you won’t see on TV!

I hope this gives you a bit of a better understanding about rehabbing and a little perspective about those shows on TV.


Next week we will take a look at Home Renovations to Invest In and Avoid In 2015.

So thanks for reading my post. I'm so glad you're here! And I’ll look forward to getting into more good stuff in future posts so that you can Turn Your House To $OLD!

Feel free to ask me any questions through the contact info below. I would be very happy to help.



Lynda  623-335-2662

TurnMyHouseToSold@gmail.com

Turn My House To Sold

More Info


____________ 
Article Source:

Lynda Bathory

Friday, March 6, 2015

Wholesalers Steal Houses! Don’t They?

Over the past couple of weeks we have looked at some of the necessary preparations for selling a house the traditional way and some of the reasons why this may not be possible or practical for some property owners. These reasons usually involve a property that is not in good enough condition to sell on the retail market, or must be sold quickly.



What is a person to do if they cannot sell their house the traditional way?

There are many buyers who are willing to buy properties in “as is” condition. Some of these are just regular people who can’t afford to pay top dollar for a perfect house. They are willing to buy a rundown house and work on it over time to fix it up. This is known as “sweat equity.”This type of sale works well sometimes, but not always. Sometimes the new owner will try to sue the old owner for “hidden defects” if there are unexpected problems with the property. Also, it can take some time to find the right buyer.

A more elegant solution would be to work with an investor.

Investors are people who are usually willing to buy property in any condition. The house can be in good, bad or even destroyed condition. Some buy houses while others buy apartment buildings or commercial properties. They buy them and improve them, then keep them or sell them for profit. Just as there are many types of properties, there are many types of investors. Some make direct contact with the property owners while others tend to work with other investors.

Wholesalers work directly with sellers who need to sell their properties. In most cases, these are houses that are in some form of physical distress, or the seller just needs to sell the property quickly. When a wholesaler is discussing the offer, they usually take into consideration any repairs the house needs, and deduct it from the offer price. The wholesaler knows that these problems will need to be repaired before the property can eventually be put up for a traditional sale. That is why the offer may seem low to the owner. Some owners even go so far as to think that wholesalers are trying to swindle them out of their houses!

This may sound like the owner is being taken advantage of, but if the owner is able to pay for the repairs themselves in preparation for a traditional sale; they would still have to live through the stress and inconvenience of being in a work zone for several days or weeks.

Once the house was back to normal, they would still have to wait months or years for the house to sell!

When a wholesaler buys a house, they are usually willing to do so on the day that suits the owner. 

At first glance, this may not seem like a big deal, but really it is.


If a traditional sale takes between three months to two years, the owner would not be able to easily go to their new location. They could wind up staying in this house, or paying for the old and new house at the same time! They would have to continue paying the loan, the taxes, some utilities and (vacant property) insurance until the house was sold. 

If this was just $1000 a month combined, after a few months or even a year, it would be costing the owner a substantial amount! If they had to move, they would probably also have to hire a property manager to keep up the house.

Depending on how long it takes to sell, by the time the house finally sold, the owner could have paid $5000, $10000 or even $25000 in expenses PLUS the costs of any repairs they did to put the house on the market!

So a wholesale deal is actually pretty good for the owner. They don’t have to pay for and live through repairs. If they need to move, they don’t have to pay the expenses of a vacant house. They don’t have to worry about an empty house being vandalized. They can have the sale the day THEY choose and move when they want!



Why would a wholesaler agree to do this? It is not often talked about, but a wholesaler makes a fee. TYPICALLY they make $2000 - $5000 when they find a buyer for the property. This buyer is usually another investor who is too busy to look for houses. But wait a minute! If they are getting money, then they are just like a real estate agent! Well….no. Agents don’t usually BUY problem properties, and they certainly don’t guarantee the date of sale! All in all, it is a fairly reasonable amount considering the many advantages to the property owner.

So I hope that this has given you more information and a better perspective on wholesalers. At the very least, I hope you no longer believe they steal houses!


Next week we will take a look at the truth behind the Fix and Flip industry and why that matters to you.

So thanks for reading my post. I'm so glad you're here! And I’ll look forward to getting into more good stuff in future posts so that you can Turn Your House To $OLD!

Feel free to ask me any questions. I would be very happy to help.        

Lynda   623-335-2662





TurnMyHouseToSold@gmail.com



Article Source:

Lynda Bathory