Posts Tagged ‘resale value’

You would be much delighted if investment of your hard earned money pays off. A sound planning is essential while investing your money in the real estate because of the ups and downs in the market. It thus becomes necessary to get sound property investment advice before you plan to investment in the real estate. You need to take into account various factors like rising prices in the market, shortage of rental properties, demand for properties in a specific location and more before devising your investment plan.

Planning

You should study and monitor the market with utmost care as it will help you in understanding the position and direction of prices in the properties market. Understanding this is very crucial as the prices vary consistently. It will also help you to estimate the actual value of proposed property investment by monitoring the market. Apart from that, you also get an idea on the future of the investment and mortgage dealings.

Various Aspects of Investment

When you wish to invest in a property, there are certain peripheral expenses than the actual cost. Real estate investment gets taxed according to its value. This is over and above the money spent for the maintaining and repairing the property. You will have to take into account all these factors when you actually project the incomes and resale value for the proposed property. Positive or negative gearing means the profits or the loss incurred from the investment. The additional income also gets taxed while the deductions are from the surplus amount and not the bare minimum amount.

Multitask with Equity

You can arrange sufficient capital for your new investment from the real estate equity which you own already, which is advisable instead of going for a financial assistance from a bank. This method is an ideal way to start your new investment. But you have to allocate only certain percentage of the price for new investment if there is no problem in repayment.

Identify and Pool your resources

Quite often, it becomes difficult for a new investor to completely own a property with his money. It is not possible always to fund for the entire investment from your pocket as most are common investors. Hence, using the collective property deal is a better and wise idea. Identify likeminded friends, family, relatives or colleagues and pool your resources in order to fund the investment in a new property. But ensure to make an agreement among your partners regarding the method of sharing the benefits and losses, so that there would not be any hassles in the future. It is advisable to go for a legal agreement depicting the proportion of investment and sharing methodology to prevent problems. Sharing of benefits or liabilities is generally proportional to the investment ratio.

Help from Professionals

A professional counselor or a real estate agent can provide you the required Property investment advice to plan your investment methodology. They will also assist in assessing the scope and future value of your investment as they have more knowledge about the market.

Join Forces with Our Nationally Recognized Real Estate, Mortgage, investment Financing Experts to Navigate the Current Market to Earn Record Profits. Visit our advisers now at http://www.realestateadvicepros.com/

Author: Tom Wee Arnold
Article Source: EzineArticles.com
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Whether it’s a new condo building or housing estate going up in your area, you may have heard buzz about pre-construction sales or pre-construction purchasing opportunities. But, what does that mean? How does it work and why do buyers line up for viewings? For answers to these questions and more, keep reading.

What is pre-construction purchasing?

To pre-sell units, raise capital and finance the remainder of their projects, builders and developers often pre-sell a number of units at a discounted price – usually 10 to 15 percent lower than for what they intend to sell the units or houses once completed.

What’s the advantage of pre-construction investing?

Whether you plan to purchase the home as a primary residence or as an investment property, this allows you to obtain the property for less than the prospective resale value.

What’s stopping me from selling it right away for a small profit?

Most developers have restrictions in place that prevent buyers from selling their pre-purchased properties until either all or almost all the units have been sold. In addition, some developers put a time restriction on sales to prevent buyers from selling their units at less than the developer price and undercutting them.

Are their risks involved?

Yes – for example, if the real estate market is slow and the developer decides to lower the price of the units once they’re completed, your unit’s market value has effectively been decreased.

Also, buildings and developments aren’t always completed on time, so prospective homeowners shouldn’t bank on a unit or house being finished in 16 months just because a builder says so.

Do I have to start paying right away?

Most pre-sales require a down payment or deposit on the home and then no more payments until the house is actually completed. In the meantime, your down payment cash will be locked into that property. However, you’ll have time to save money and later increase your down payment while simultaneously gaining equity in the property as it’s built.

What about group or wholesale pre-construction investing?

Wholesale pre-construction investing works by taking a small amount of money from each member of a larger group of investors. Those funds are then used to buy a block of units or even just one pre-construction unit, with the expectation that it will later be sold at a profit.

In most cases, wholesale pre-construction investment firms are legitimate business, but you should always investigate a company and its representatives thoroughly before handing over your money.

Home improvements are made for a variety of reasons. Sometimes those reasons are confused in the mind of the homeowner. That explains the first of the common mistakes listed below.

1. Not Being Clear About Your Purpose

With any home improvement, you should be clear about why you are doing it, so you can be clear about whether it is worth the cost. People often confuse their motivations, saying that a given project is not only to make the home more livable for them, but is an “investment” as well. The problem is, it may not be an investment that yields any return.

In a report recently in Remodeling Magazine, the average cost and added value of various home improvements was shown for different areas of the country. The worst remodeling projects, including creating a home office, only returned about half of the cost in added value. With the best, including a basement remodel, you get back about 90% of what you spend.

Let me do the math for you: every single one of the improvements in every area of the country was a money losing proposition on average. Now, it is true that some are better than others. The average attic bedroom addition only cost $13,000 more than it adds in value to the home, while you lose $30,000 on the average master bedroom suite project. It is also true that if you are knowledgeable and creative, you can add more in resale value than you spend.

Be clear about this. If you spend $68,000 creating a master bedroom suite, and it only adds $38,000 to the value of your home, this is not an “investment.” The real cost in the long run is $30,000. That’s what you pay for your personal enjoyment of it.

With that in mind, you may want to consider how long you will live in the house, and divide that costs into those months to decide if it is really worth it. If you move five years later, that nicer bedroom cost you $6,000 per year to enjoy, or $500 per month. If that seems reasonable, do the improvement. If an extra vacation or two annually, or $500 per month going into a retirement account, or any other way you could spend that $30,000 sounds better, drop the project or scale it down.

2. Not Being Clear In The Contract

If you don’t know what you want, you are likely to pay a lot more than you think for home improvements. This is because whatever you agree with the contractor on, that’s what you get for the price. Every little change will be extra, so know what you are trying to do in advance, and make sure it is included in the bid and the contract.

You may be wise enough to have a deadline in the contract, rather than just an “estimated date of completion.” But a deadline alone may not be enough. You may also want to consider a clause that specifies penalties for not completing the job on time. A line saying that the price will be reduced by $100 for each day past the deadline is a “motivational clause.” Also, never pay in full until the job is done.

3. Not Being Prepared For The Process

Large home improvements involve large messes. You may have to deal with dust and piles of construction materials for weeks or longer. Consider this when planning when to do the remodeling. Ask the contractor (before you sign the contract) if he will be completely cleaning up the mess in the end, and what you can expect during the process. Will they be providing a bathroom, or will the worker need access to yours? Will there be security issues, like walls that are open to the outside for days? Will you have to chain up your dog or warn the children about dangers?

The bottom line? Avoid these common mistakes and you will probably be happier than most with your home renovations.

Home improvements are made for a variety of reasons. Sometimes those reasons are confused in the mind of the homeowner. That explains the first of the common mistakes listed below.

1. Not Being Clear About Your Purpose

With any home improvement, you should be clear about why you are doing it, so you can be clear about whether it is worth the cost. People often confuse their motivations, saying that a given project is not only to make the home more livable for them, but is an “investment” as well. The problem is, it may not be an investment that yields any return.

In a report recently in Remodeling Magazine, the average cost and added value of various home improvements was shown for different areas of the country. The worst remodeling projects, including creating a home office, only returned about half of the cost in added value. With the best, including a basement remodel, you get back about 90% of what you spend.

Let me do the math for you: every single one of the improvements in every area of the country was a money losing proposition on average. Now, it is true that some are better than others. The average attic bedroom addition only cost $13,000 more than it adds in value to the home, while you lose $30,000 on the average master bedroom suite project. It is also true that if you are knowledgeable and creative, you can add more in resale value than you spend.

Be clear about this. If you spend $68,000 creating a master bedroom suite, and it only adds $38,000 to the value of your home, this is not an “investment.” The real cost in the long run is $30,000. That’s what you pay for your personal enjoyment of it.

With that in mind, you may want to consider how long you will live in the house, and divide that costs into those months to decide if it is really worth it. If you move five years later, that nicer bedroom cost you $6,000 per year to enjoy, or $500 per month. If that seems reasonable, do the improvement. If an extra vacation or two annually, or $500 per month going into a retirement account, or any other way you could spend that $30,000 sounds better, drop the project or scale it down.

2. Not Being Clear In The Contract

If you don’t know what you want, you are likely to pay a lot more than you think for home improvements. This is because whatever you agree with the contractor on, that’s what you get for the price. Every little change will be extra, so know what you are trying to do in advance, and make sure it is included in the bid and the contract.

You may be wise enough to have a deadline in the contract, rather than just an “estimated date of completion.” But a deadline alone may not be enough. You may also want to consider a clause that specifies penalties for not completing the job on time. A line saying that the price will be reduced by $100 for each day past the deadline is a “motivational clause.” Also, never pay in full until the job is done.

3. Not Being Prepared For The Process

Large home improvements involve large messes. You may have to deal with dust and piles of construction materials for weeks or longer. Consider this when planning when to do the remodeling. Ask the contractor (before you sign the contract) if he will be completely cleaning up the mess in the end, and what you can expect during the process. Will they be providing a bathroom, or will the worker need access to yours? Will there be security issues, like walls that are open to the outside for days? Will you have to chain up your dog or warn the children about dangers?

The bottom line? Avoid these common mistakes and you will probably be happier than most with your home renovations.

It is common to look for ways to increase your home’s value when getting ready to sell. But there is another approach here as well. It is trying not to do the things that lower home value, or cost more than they return. What are these things? Let’s look at a few.

Unusual Decorating Schemes

We have made a disco out of our garage, complete with mirror-ball, colored lights, and flowers painted on the walls. As much as we like it, this probably lowers the value of our home. We can live with that, but if you want to maintain the resale value of your house, avoid unusual decorating schemes and other such “improvements.” That television room painted in the colors of your favorite football team may be appealing to you, but it almost certainly means selling your home for less.

Reducing The Number Of Bedrooms

I know of a family that decided to make two bedrooms into one large one by knocking out a wall. Doing this may or may not affect a home’s value if there are at least four bedrooms to start with. But if you make a three-bedroom home into one with two, you are going to have a lot fewer families looking at it when it is time to sell. Ask a real estate agent or two what kind of homes are most in demand before you ever reduce the number of bedrooms.

Bad Landscaping

You might have put thousands in improvements inside the house and still have reduced the selling price because of an ugly lawn. Why? Because buyers will never see the inside of your home if they are scared off by the outside. The fewer people that see the house interior, the less likely you are to find the right buyer who will pay what you want.

The appearance of the front yard (or whatever part is first visible) is the important thing. It is that first impression that people have when driving around looking at houses, which gets them to call up the agent and set up a viewing. Make sure the bushes are trimmed and the grass is green when it is time to sell.

Odd Additions

A neighbor of ours decided that he wanted a “mud room” on his house, because the front door opened directly into the living room. Perhaps there was a way to make it look good (not sure about that even), but he chose to build it himself using plywood. Soon afterwards he was selling his now much-uglier home. My guess is that it cost him $500 to reduce the value of his home by a lot more than that.

Of course, sometimes an unusual addition can add value to a house. An extra bedroom stuck on the back of the house, for example, can certainly make a home more usable for families. But if it doesn’t go well with the rest of the structure, it may add less to the eventual sale’s price than it cost to build. In other words, you might spend $10,000 to add $5,000 to the home’s value. Keep that in mind if you are planning to sell in the next few years, and are thinking about converting a back porch into a bedroom or making an office in the basement.

If you are going to live in your home for a long time, you may want to make the changes that make sense to you, regardless of whether they lower the value of the home, or cost more than they return. But you should at least keep in mind what that effect will be, so you make such decisions wisely. I once met a nice young couple who had increased the value of their home by $10,000 with kitchen upgrades, the year before they sold it. Unfortunately, they spent $40,000 to do it. That $30,000 difference means it cost them $2,500 per month to enjoy a prettier kitchen for that year.

Copyright Steve Gillman. For more Home Selling Tips, and to see a photo of the house we bought for $17,500, get a free ebook on how to buy cheap homes, and a free real estate investing course, visit: http://www.HousesUnderFiftyThousand.com