Two men renovating a home

Last week I did a similar podcast on Getting to Yes, all the reasons that a house makes a good investment. This week it’s all the questions to ask yourself and get to NO.

Again, I am not a financial advisor and you should consider these questions and this conversation as just a step towards an educated decision.

It’s no secret that I have been selling Real Estate for a while and have seen a few really bad investments from both my buyers and people buying my properties. I have shaken my head in disbelief that someone would purchase something that clearly is a bad investment. Either for market timing, property project repair, maintenance, size, style, and location. I have tried to talk sense into some of the buyers, but in the end, it is their call. I am not shy in telling them why or why not they should invest in a particular property. I merely tell them things they need to really consider before buying. I look at it from many angles. I’m not a normal Real Estate Broker. I really want people/investors to buy properties that make sense. Use it as an asset. Not as status. I feel it is my job to educate people on the possibilities. I can help them see how beautiful this property could be, with realistic projects and budgets in mind. I can help them explore how to make money with this property, from AirBnB, adding on in-law apartments, to hosting weddings in that huge, beautiful barn out back. Now in this new way of living, combining personal living with In-home business and offices which helps combine all living expenses under one roof. That’s a no brainer.

We now, more than ever, need to think outside of the box. The box being the house. What can this BOX do for me? IF we stop labeling this house as MY HOUSE, as if it were an extension of my actual body, then we could really see what it can do for us. Stop taking your house so personal. Love it, yes, but make it work for you. That’s the job of the house! It works for you.

These next questions and comments are to help guide you. Let’s check your focus. Are you good at meeting deadlines and budgets? The longer it takes to complete a project not only thins out your finances but your time. 

Do you have the funds to get this project where it needs to be? Consider the square footage, the bigger the house, the more materials you will need, not to mention the quality of that material. If the scope of the project gets too big or beyond your skill level, can you complete this job on your own? Outsourcing can be costly. Do you have estimates before going in? When I am buying or selling, I get quick estimates on jobs so that either party knows about what it will cost to update or repair. For example, if the roof looks like it needs to be done, I will get a few quotes and present them to the buyers. That way, they not only have proof of what the repair looks like, they also have someone willing to do it and they won’t come up with a crazy number to take off from the sale price. I don’t get screwed; they don’t get screwed. I am all about the facts and being fair to both sides. That way people can make better choices and don’t just throw numbers out there. That’s where big problems happen, uneducated people assuming they know. Trust your sources.

Do you have the upfront cost for down payment, closing cost, and repairs that may be needed right off the bat? General rule that you need to stay 4 years to gain back that upfront cost. Will you be keeping this for at least 4 years?

Are you good at management? You need to treat this house like a job. If you don’t run it smoothly, it will kick your ass. Usually, in the middle of a snow storm, while you’re away on vacation or on a random Tuesday on your way to the gym. Do you have plans in place for failures and maintenance? A lot of people only fix house issues as problems arise. We need to be proactive when it comes to investments. You can’t assume you can set and forget. You can’t see everything, nor plan for failure but seeing and taking care of issues will prevent major ones down the road. If you see your roof is leaking, don’t wait. A leaking kitchen faucet will rot the floor. Would you rather spend less than a hundred on plumbing repair or thousands in floor, subfloor, joist repair? Can you keep up? Can you do any of these projects repairs yourself? 

Know the market. Do you know what the market is? Do you think this home will hold value? Don’t always trust that your agent has your best interest at heart. I would like to think that they do but I have seen way too many times, agents that just want the deal. Where I would look at them and say “Hell NO” and for these reasons. I don’t ever want someone to come back to me and say “you told me this was a good investment” Some agents don’t care. Be savvy, do some homework. After all, it’s your money, your investment. Stay in touch with the market as well. Consult agents or professionals that know what the market is looking for before taking on build outs or crazy renovations. I see people over-build all the time in the wrong market. Upgrades are fine but keep in mind not to overspend. You can’t control the market.

Know the hidden cost and look for unknown hidden costs. Hidden costs are pest control, road maintenance, legal disputes, taxes, insurance, trash removal, cost to furnish the property, landscaping, and hardscaping. The unknowns are your freedom, how long before the equity builds, holding property value, over-building, and job security to name a few. Did you figure out any of this cost?

Last week I asked you to figure out the purpose of the property to help narrow it to personal or financial investment. This week is another step further to help you put data and thought to buying.  If your answer is mostly no to these questions, you can either find ways to figure out how to make it work or just simply SAY NO. This is too much for THIS property. The next property may be a yes. Don’t get discouraged or distracted, there will be a property that makes sense. Don’t settle on properties if they don’t give you what you need out of them, personally or financially.

For more information on what Light Touch Dwellings can do for you, go to lighttouchdwellings.com and take a free assessment to see where your life balance is and where we can help you align.

LTD wants you to make smart decisions that create a simpler, more efficient way of life. Follow us on FB and Instagram. 

Invest your money in things that give you some sort of return, you’ll thank me later.

Wandering Freely,

Happy Dweller