Good Bones Make a Great Fixer Upper

I enjoy working with clients who have the passion to take a neglected home and renovate it. Make no mistake, this is a BIG job. It will consume your life if you aren't careful, which is why it's so important to look for good bones.

"Good bones" is a way that people describe the fundamental parts of a home that are difficult and expensive to change. Things like floor plan, room sizes, electrical/plumbing systems, ceiling heights, etc. You can paint and add granite counters to any home, but if it’s missing some of the fundamentals, you may have trouble selling it later.

I was exploring some of East Nashville’s fixer-uppers this morning with a wonderful client of mine. We looked at some that needed hardly any work and others that needed complete renovation. Since I try to attend every home inspection personally and I've renovated a home myself, I’ve learned quite a bit about the systems in a home and where the common problems are. Sometimes I probably point out too many things to my clients, but I want to help them understand what their getting into.

Here are some bones to look out for:

Floor Plan- Watch out for funkiness. Does the layout make sense? Is one of the bedrooms a walk-through? Are there closets? Where will the fridge and dining room table go? Where is the washer and dryer? A home with a great floor plan will be easier to sell down the road.

Structure of the Home- How is the foundation? Are the floors level? Is there water damage? What’s causing it and is it easy to repair? Is the roof in good shape? Is there a basement or crawlspace? Any water problems down there? (BTW- water issues are the #1 killer of a home, reminding us all to clean out our gutters!)

Systems- Are the systems outdated? What about the HVAC? Are there old ducts wrapped in Asbestos tape? Is the wiring grounded? Fuses or circuit breakers? Any knob & tube wiring? Galvanized or copper plumbing? How’s the water pressure?

Location- This should probably be at the top of the list, since it cannot be changed. More than anything else, location will greatly affect the value of the property. Don’t think you can overcome it by dressing up a home in the wrong neighborhood!

Lastly, when you’re considering a fixer-upper, you have to know the numbers going in. What are other homes in the neighborhood selling for? How much money and time will it take to renovate it? How quickly are home selling? What are the trends in the area?

It’s a lot to think about, but when you’ve made a thoughtful choice, renovating a home can be an enjoyable and profitable experience. Otherwise, you may lose your shirt…

-Peter

www.NashvilleCityHomes.com

Are You a Consumer or Investor?

I was rereading parts of Gary Keller's book, The Millionaire Real Estate Investor (MREI) last night. What an incredible book.

What always strikes me is Gary's description of the Investor mindset and how it differs from the Consumer mindset. He says, "Do you work for money, or does money work for you?"

Obviously, we all have expenses and consume things, however, what principles and priorities guide our spending? The difference is in how an investor thinks, making short term sacrifices for long term gains. For example, buy a less expensive car and put that money toward investments. Cut back on lifestyle expenses so you can reinvest your cash flow.

As Dave Ramsy says with much gusto, "Live like no one else so that later you can LIVE like no one else!"

If you need some encouragement, you should get the MREI book and read pages 151-156 where Gary goes through a simple and very conservative investing strategy that shows how you can start small, but end up with a huge payoff if you can follow the plan.

The plan is the key. If you're thinking of investing, it's so important to know what you're doing. Otherwise you may fall prey to speculation and loose your shirt! However, don't be afraid to take steps and learn along the way. You too could enjoy a huge payoff down the road.

-Peter

www.NashvilleCityHomes.com

Two Homes of the Future

In cities across the U.S. people are 'rediscovering' downtown living- forsaking the suburbs to live within walking distance of restaurants, parks and entertainment venues. This is definitely true in Nashville as we see downtown condos selling out rapidly and new construction everywhere.

The 2007 International Builder’s Show in Orlando highlighted this trend by building two different, yet incredible model homes on the same street in a historic part of Orlando. Both of the homes were built to show off the latest innovations and technologies in home building and reflect both the challenges and advantages to an 'in-city' home.

The New American Home, pictured left, is a completely new home, built to incorporate international style and yet blend in with the surrounding historic homes. The 3-story, "urban loft" home with roof plaza will feature 4,707 sq. ft. of air conditioned living area plus a 576 sq. ft suite above the detached garage. Sales price will be around $3 million.

The Renewed American Home, pictured right, was originally built in 1909. It was moved from its former site then fully renovated and expanded to 5860 sq. ft. of air conditioned living area, not to mention the basement and two-car garage. Though keeping some of its historic charm, the home includes the latest in automated controls from the lighting and zone audio systems to the security and safety systems. It's a marriage of a historical environment and a modern entertainment lifestyle. The home will also sell at around $3 million.

I know you want to see more pictures and get more information about these homes from the International Builder's Show. Just don't get too envious.

-Peter
http://www.nashvillecityhomes.com/
REALTOR. City Home Specialist.

Begin With the End in Sight- Profit!

If you’ve been staying up late at night watching home shows about “flipping” houses for piles of cash and have decided you’re ready to give it a shot, I’ve got some advice for you- "wait". I don’t mean that you shouldn’t follow through, but you should take a few moments (maybe even days or weeks) to think first! That is, if you want to actually make money at it.

I work with homebuyers and sellers who are players in this business and I’ve come to realize that making a profit flipping homes is learned skill. Of course there are those that get such a good bargain that it’s hard to not make money, but most of the time it’s not that easy. It’s a business venture based on hard numbers and budgets. To maximize your profits you need to know what your goals are and have a roadmap to get there.

Gary Keller, author of The Millionaire Real Estate Investor, says, “When you ‘buy it right’ you make your money going in.”

Kevin Myers agrees in his book Buy It, Fix It Sell It… Profit. He writes, “You, the investor, are in control of every aspect of the transaction from start to finish. You will know going into a deal what it will cost to fix up the property and for how much the property will sell for in the end. Best of all, you will know exactly what your profit will be, because you have included it in your buying decision.”

That’s the idea and it’s not easy. To “buy it right” you have to have an intimate knowledge of home values and what it costs you, both in labor and materials, to prepare a home for sale. To accomplish this, the best real estate investors have a network of people at hand. From Realtors and mortgage lenders to painters and carpenters it takes a host of trusted team members to make the venture a success. So, like I said, it’s a learned skill.

If you’ve read Stephen Covey’s famous 7 Habits of Highly Effective People you should be familiar with what he calls “Begin With the End in Mind”. It’s the same principle that I’m talking about, except he’s applying it more broadly.

Covey says, “How different our lives are when we really know what is deeply important to us, and, keeping that picture in mind, we manage ourselves each day to be and to do what really matters most.”

When applied to real estate investing or any type of business, it means that we have clear goals and endpoints in mind when we start the venture. Sounds like good advice though not as simple as it sounds.

Ready to Jump In?
Whether you’re an experienced real estate investor or just starting out, please let me know what you’re looking for so I can be on your team and contact you when I come across a property that may fit the bill. Also, when your project is complete, I can develop a strategic marketing plan to sell it for the most money in the shortest amount of time.

-Peter

www.NashvilleCityHomes.com
REALTOR. City Home Specialist.