When it comes to optioning the house, the primary question an investor should be asking themselves upon an acquisition is whether or not the option selected will contribute to the sell-ability of the house, relative to the actual cost. Obviously, there's a point of diminishing return if one builds a Taj Mahal in a land of tract homes. Despite the urge to go all out and deck the place to the tee, please resist the temptation. Doing so will only cut down on your return. This is particularly important given the fact that since it is an investment, an investment with an unknown value, it is not prudent to put some of the potential gain at risk by purchasing unnecessary design upgrades that are not critical.
More often than not, homebuilders are aware of this vulnerability. This is more then ever true for investors, for whom they will provide a glut of options and upgrades that are grossly marked up. This type of financial exploitation provides an income stream that is indispensable to many homebuilders, such as KB Home, who are notorious for their exuberant cost upgrades and options. This system is so elaborate that their design department is a whole corporation of its own-which is known as KB Home Studio and rivals that of most high-end design centers. Not only are these stand-alone profit centers, KB Home has a separate business unit with senior vice presidents, AVPs, regional heads, etc., to take care of this organizational monster. The great thing about this apparatus is that it offers a plethora of design upgrades and options that are really top-shelf. The only problem is that you usually have to pay an arm and a leg to get these wonderful amenities.
To relate a story, the first time I went through a KB Home Studio, it was baptism by fire. I spent over eight hours in the design center, split over two days. At $ 35,000 plus in upgrades, I estimated that it cost me about $ 4,300 an hour to shop in their design center. You can see why I was happy to get out of there. Keep in mind also, that you may be required to pay a fraction of the upgrade costs in the form of a deposit soon after selection. This is almost a certainty and industry standard. On average, the deposit amount runs 25 percent to 50 percent and are usually nonrefundable. The consequence of this deposit requirement is apparent, in that it makes it more difficult, especially as an investor, to walk away from a transaction.
In spite of the latter, you can see on a pure convenience factor, it's hard not to like that a homebuilder can offer you lots of options. Having the "convenience factor" available is all good and well; however, it becomes somewhat of an entrapment issue when the builder offers a plain vanilla box without any or few upgrades. In these cases, sometimes builders will only go to "code" -meaning, only providing what is necessary to have the local housing department or building and safety, at the city or the county level sign off on the property and give it a certificate of occupancy. This for instance, may mean no rain gutters, no landscaping in the front or back, unfinished garages, which typically consist of drywall with a coat of primer, or an unfinished garage consisting of the latter but with exposed 2×4 studs, sheetrock, chicken wire and black installation coversheet. Other more obvious "standards" include all vinyl flooring and small 4×4 white tile for the kitchen countertops, or cheap laminate for that matter. To top it all off, in terms of complete ugly-fication, you might get the builders' special quarter-inch clustered marble countertops in the bathroom.
There's a reason why even home design centers at Home Depot or Lowe's highlight these amenities, and that's because they're cheap and nobody really wants them. Consequently, many homebuilders offer the standards in order to eek out as much money as possible out of each home they build. As a result, a new homeowner and / or investor is essentially forced into buying options and various upgrades in order to avoid the home looking like a plain Jane. Having too much of a plain Jane can actually hurt a home's value. As an investor, it's up to you to define the balance without overspending on a new tract flip. That's the nature of making a business decision: you have to use your judgment. I've seen some homes that were literally destroyed from the inside out given the extreme lack of appeal that permeated the house as a result of no upgrades. As an example, spending an additional $ 4,000 to $ 6,000 on upgraded floorways and kitchen countertops is probably well advised. Most carpeting, even if it does not have stain guard, should be adequate for most homes. Do not be pressured into upgrading into a thicker padding for the carpet. Just go with the standard one-quarter inch, since most builders will try to get an extra $ 700 to $ 1,200, if not more, added to the cost of the house just for upgraded padding.
Source by D Sidney Potter
Many people are enticed into house flipping by television images of people ripping materials out of a dilapidated house, refurbishing it, and selling it for a substantial profit. The profit realized from each flip can be modest or substantial – or the investor could lose everything depending on decisions made before or during the process.
My house flipping budget checklist
Before you go shopping for the perfect rehab-to-flip property, you need to create a budget for the entire project, not just the purchase and rehab expenses.
The first item on your check list does not have direct monetary value and can not be added into the expenses column. However, it is an important "ingredient" to your budget: an excellent credit score. Unless you are funding a flip entirely with cash or through private means, an excellent credit score works in your favor with the banks – especially when the loan is for a high-risk project like a house flip.
Now, let's look at the specifics of your budget:
• The After Repair Value (ARV): determining the ARV of your potential flip is the starting point on which you can base your expected return on investment (ROI) when the house is put on the market. A trusted realtor can help you estimate the ARV of the property.
• Rehab costs: these will vary widely depending on how much rehab work needs to be done. A budget repair form can be handy for tracking all the repairs needed.
• Financing / carrying costs: these include not only the loan but also the costs of carrying the house until it is sold:
o Financing loan (s)
o Property taxes
o Utilities (gas, water, electric)
o Property insurance
o HOA / Condo fees
An important point to note here is that the longer the rehab work takes and / or the longer the post-rehab house stays on the market, the greater your carrying costs and the lesser profit you may realize.
• Realtor's fees: you can sell your flipped house yourself (FSOB – For Sale by Owner) but if you are looking for the fastest turnaround on your investment – and profit – relying on a good real estate agent is worth the commission fee (and actually helps you save money on your flip project in the long run).
• Forgotten costs: these are additional expenses of house flipping that are often overlooked, including:
o Inspection fees
o Interest on loans
o Closing costs
One experienced house flipper's average budget was broken into these cost percentages:
• 53.25% = Purchase Price
• 20% = Labor
• 6.5% = Materials
• 8% = Carrying costs, utilities, commissions, etc.
• 12.25% = Profit
Realistic budgeting = reduced risk
There is nothing that can completely eliminate the risks inherent in house flipping but creating a realistic budget is one of the key ways to mitigate some of that risk. Another way to "manage" some of the risk is to become as thoroughly knowledgeable about house flipping before you make your first investment. And a final way to manage risk is to follow the old adage and never invest more than you can afford to lose.
Best wishes for your house flipping success!
Source by Bill Len
Bathrooms are one of the key rooms to focus on when staging for the selling market. Like bedrooms, they've become more than their names suggest, just places to bathe or sleep, they're seen as pamper rooms & havens of relaxation that mimic the hotel luxury chic many have come to enjoy.
However like kitchens, they are seen as expensive rooms to refit or redecorate. If buyers do not see a bathroom that appeals they will estimate it will cost thousands to refurbish and that will come off their offer price or else put the buyers off putting in an offer! For these reasons it is vitally important to pay attention to your bathroom when your home is for sale.
Here are my 'Top Tips' on staging your bathroom for the market.
1. Clean, Clean then Clean again!
No one likes the idea of someone else's dirt. The bathroom is a place where we remove all of our protective layers. When staging your home roll up your sleeves, get out the gloves and clean every surface from top to bottom. Scrub down those tiles, wash or change the blind, shower curtains. once you've finished cleaning … clean again and keep it clean.
2. Carpets, Toilet Mats & Loo Seat Cosys!
Carpets may be soft under foot but they hold onto moisture and odors. I really encourage everyone selling to remove them and replace with tiles, bathroom grade wood laminate or a good quality lino. Those mats that fit around the pedestal of toilets and sinks look old fashioned plus just imagine what may have splashed there over the years … I know that your viewers will be thinking this!
Loo Seat Cosys, those loopy covers that fit over the lid – Do not!
3. Let The Light Flood In
If you have a window to your bathroom, clean it thoroughly, remove the nets (so long as it's not clear glass) and raise the blind fully or pull back the curtains to let as much natural daylight in as possible. If privacy is a consideration then consider using a frosting film or paint to obscure the glass but allow maximum light in.
4. Clear The Clutter
Bathrooms can be like curiosity shops with all the personal care products we use these days. When selling clear every surface of all your day to day care products. Leaving stuff on show distract buyers as they start to see your lifestyle and not the room. Just remember 'Too Much Information' is not a good thing.
5. Tile & Grout
If the tiles are in good condition and the colour works then give them a thorough scrub, to remove built up grease and grime. If the grout is in good condition but discoloured then use good old bleach & a tooth brush to bring the whiteness back (wear protective goggles & gloves) or use a grout pen to restore the whiteness. If the grout has cracked and fallen out, pay for a tiler to regrout, it will make the tiles look good as new.
If your tiles are old fashioned in colour or style then consider either painting over them with a special tile paint or consider tiling over them (sound tiles make a perfect surface to re-tile onto).
6. Mould, Mildew & Mustiness
There is positively nothing more unpleasant than walking into a bathroom that has any of the three in it. One whiff of mustiness, a patch of ceiling mould or a mildew bathmat or shower curtain and you will kiss the house sale good buy. If you've got mould, get to the root of the cause – check the vent is clear, repair the extractor fan or fix the leak causing it then repair and paint (use a mould inhibiting paint).
Mildew items like bathmats, old flannels, stained shower curtains & face cloths or damp mops and cleaning items should be tossed in the bin and replaced. Mustiness must be banned. Air your bathroom and do not dry damp towels, or other items, on the radiators.
7. Taps, Shower Heads & Hoses
These are prone to scale up and look unpleasant. Use a quality descaler and bring the shine back to those chrome or metal finishes. Shower heads and hoses can also look unappealing and collect grime over the years so remove them from their fittings and descale and clean them. Use an old toothbrush to really get into the nooks & crannies. If fittings are beyond cleaning, perhaps the metal has worn away, then consider replacing with fresh new fittings.
8. Other DIY Jobs.
As always finish off any maintenance that you have left such as refitting the broken shower curtain, light fitting, towel rail, shelves etc. Buyers will see unfinished DIY and knock hundreds off the asking price as a result.
9. Attractive Accessories & Smells
Appeal to your buyers aspirations. After you have put away all of those everyday care products, invest in some attractive bath oils, scented soaps, natural candles that will gently infuse the air with a clean but not clinical smell. Purchase a set of matching towels that work with your colour scheme. These towels are for show only, keep everyday towels to hand but only display the show towels during the viewing.
Plants add a freshness & softness to bathrooms. Buy healthy bathroom loving plants that are appropriate to the space you have. In larger bathrooms palms can work well, in smaller bathrooms 'Ivys' and 'Peace In The Home' may work better. What ever the plant they must remain in tip top condition.
10. Keep It Clean & Tidy
As with every room when selling your home, once it's presented then you need to keep it that way. This can be hard when you are living in the property, especially in the bathroom.
My advice is to invest in some simple wicker baskets, one for every member of the household. Keep the everyday toiletries in these baskets and only take them into the bathroom when using it. Stowe them away in a bedroom cupboard. Like wise with every day towels.
Be firm with everyone in the house and ensure that all take responsibility to keep the bathroom clean and ready for a viewing. Buyers love the idea of a brand new bathroom that no one else has ever used. If you do not have a brand new bathroom do all in your power to present the one you have 'As Good As New'.
Source by Brian Cotsen
After decorating my front yard this past weekend as a scary cemetery complete with ghosts and ghouls for Halloween, it made me wonder what's best for home sellers to do during the holidays, decorate or not?
Sometimes it's hard enough to get sellers to agree to remove certain objects or tone down accessories in their home or front lawn. So, when it comes time to decorate for Halloween, display pilgrims and turkeys, set-up the menorah or Christmas lights and trees, what are stagers or even Realtors to do to make sure the home still appeals to buyers?
It's hard to imagine buyers receiving a good vibe on a home if they're walking up to the door surrounded by a makeshift cemetery. Plus, they may get distracted with the holiday décor and overlook the curb appeal. While Halloween and Thanksgiving are celebrated by most, Hanukkah and Christmas are religious holidays that buyers could discriminate against. So, it's important for sellers to target buyers based on your neighborhood. If your neighborhood is festive during Christmas then a buyer would expect Christmas decorations at your home, on the other hand, if you live in a "politically correct" neighborhood with a mix of religious beliefs use more generic decorations to promote Season's Greetings rather than your specific holiday.
While it's easier to take your home off the market during this time of year, many sellers can not afford to lose those months. Keeping your home on the market can be beneficial there is usually less inventory and those looking to buy are serious, but it may be hard to schedule appointments and many agents take time off then. If you do plan to keep that for sale sign up make sure you keep your decorations to a minimum.
Keep the tinsel, garland and most of those blow-up characters in storage. The entrance should be simple. Use more natural elements: For fall add pumpkins, stacks of hay, cornstalks and do not forget to plant some mums (you can also prepare the home for spring now by planting daffodils and tulips). For winter group poinsettias and use evergreens to create floral arrangements. Door wreaths welcome all to your home and set the stage for celebrating. Use holiday colors that blend in with and dress up your home's exterior colors. Attach tree branches from your garden, gourds or flowers, and ribbons. Use a few strands of white lights for elegance or keep to a color scheme, forget about the multi-color strands this year. Most importantly, refrain from objects attributable to specific religions.
Scene Stealers Inside
During staging it's important to make focal points stand out so do not block or cover up fireplaces, stairs, and stained-glass windows those features that sell. Rooms filled with decorations can feel smaller and stops the buyer's eyes from visualizing themselves in the space. Choose specific areas to stage with festive themes. You want buyers to see themselves celebrating their holidays in your house. To do this you want to create a simple, clean, cozy space with your decorations. Set your formal dining room for Thanksgiving or Christmas dinner. Bring in a Christmas tree making sure it's not oversized. Again use natural elements to bring in texture and interest like an evergreen garland or pine cone centerpiece. Color is also important to keep in mind keep within a color scheme. Red is not only the color of Christmas, but it's an emotionally appealing color that you are able to use in the space.
Do not forget to think about what the holidays mean to you then incorporate that into your vignettes. Do you love decorating the tree? Creating a Gingerbread House? Making Apple Cider? Christmas Morning? Family Dinners? Or Sitting by the Fire? Create those imagines for buyers. Play into Using the Five Sense to make them feel at home.
And just because you may not be able to decorate as you would in the past, you can still celebrate those traditions, take part in holiday activities and get in the festive mood through 'buyer's eyes,' it's a spirit that may result in selling your home.
Source by Tori Toth
In 1973 a film entitled "Do not Look in the Basement" was released. It was originally entitled "The Forgotten" in reference to the ignored patients of an insane asylum, but someone thought it would attract more movie goers with a new title. After all, basements can be creepy.
Dark, dank and dirty is what usually comes to mind, never mind those hidden corners where something just might pop out!
Well, perhaps "The Forgotten" was an appropriate name after all, since basements are one of those areas in a home that is often overlooked when staging a home for sale.
Basements, whether finished or unfinished, add valuable square footage to the house.
Basements should receive as much attention as the rest of the house when it comes to the Must Do's of staging:
- Begin by decluttering. Discard, sell or donate any items you have not used in years. Basements tend to collect items we think we might use someday, such as old faucets, old appliances (left), toys, luggage pieces, etc. So ask yourself "will I ever really use this?"
- Consider renting a storage space for items that you are keeping but will not use or need in the next 6 months, especially if you are considering renting storage for unneeded furniture and items in the rest of the house. It may be worth it.
- At the very least, buy moving boxes and begin packing. Or purchase plastic storage bins with covers as you can probably use them for storage in your new home. Stack the boxes or bins neatly, or even better, purchase metal shelving to stack them on.
- The basement should be cleaned thoroughly. You want to remove the "yuk factor" when buyers view the space. Sweep and mop the floor, or vacuum the carpeting. Make sure you remove cobwebs and dead bugs from corners and along the ceiling.
- Clean the windows and remove excess vegetation from outside the windows to let in as much light as possible. Open the curtains, if any.
- Wipe down exercise equipment, ping pong table, and anything that has collected dust.
- Install extra lighting, even if it's a bare bulb and pullchord, in dark corners or areas.
- Paint the floors of an unfinished basement ( check with your paint store for the best product). It makes the room brighter and cleaner in appearance. And it does not have to be the typical gray.
- A fresh coat of paint on sheetrocked walls also goes a long way in making the space appear clean and as valuable as the upstairs space.
- If your basement does not have walls separating each room, it's important to designate areas, each with a purpose. For example if you have exercise equipment or children's toys scattered about, designate an area for each so that it appears that the basement has an exercise "room" and a children's "playroom".
- If the washing machine and dryer is in the basement, set up this area as a laundry "room". Make sure this area is sparkling clean, since no buyer wants to do laundry in a dirty area. Set up an ironing board and iron and / or a table to fold clothes. Store laundry supplies neatly on shelves or in a cabinet.
The same goes for other areas in a basement: home office, media room, workspace, arts and crafts space. Make sure each area is clearly designated.
Buyers expect the basement to be dark and dirty. Why not surprise them with a clean, bright, organized and neat space? The buyers will also perceive that you are the type of homeowner that takes care of things and does not neglect the ongoing maintenance of the house.
Basements are one of the often overlooked spaces when staging a home for sale. Since basements add extra square footage to the house, it's important that they look their best to potential buyers. Here are some things you can do to get them in "show ready" condition.
Source by Donna Dazzo
There's no doubt that there's money at home-staging. If you are a home-stager, you know that you are in a unique business. You get to apply your designing and decorating skills while getting paid! But just like anything else, this business has its disadvantages aside from its benefits.
In this down real estate market, every seller wants to sell their homes fast that they do almost anything to generate a sale especially for their properties which had been stuck for more than a year or so. This is because in real estate, the longer the property stays in your hand; the more difficult it is to be sold. The listing becomes stale and real estate agents will not be willing to show those buyers as there are newer properties in the listings.
The best strategy for sellers to get rid of stuck properties is home-staging. But is repairing, painting, changing of curtains and putting a few flowers in a property worth it? Let's just say that doing all those processes are not expensive, but have you thought about your competitions? The new built homes? The following are the other disadvantages of this business.
There are many anxious sellers who are desperate of getting rid of their homes and the easiest way that they seem to make that happen is to have their home for home-staging. Staging is, no doubt, the most unique approach to sell homes. However, is it really worth your time and effort? What if you staged a home, and still never sell? You just got your money wasted as well your own time. So what to do?
The following are some tips on the advantages and disadvantages of home-staging your property that is up for sale:
1. It takes so much time and so much effort, and may become expensive in the case of homes that are hard to sell.
2. When talking about investment, home-staging is not practical. Remember, a good investment is spending one dollar and getting two in return. If it's 1 to 1 or 1 to 0, then it is a very bad investment.
3. If you stage the home while you are still living on it, you will have to empty the furniture, empty the closets and drawers, and keep the bathroom clean and fresh every day. That's another household chore that is difficult to maintain in regular days.
Unless you are willing to make sacrifices, exert extra effort and willing to risk your money, home-staging might not work for you, so think carefully.
Source by Monte Mohr