Things That You Should Fix For Fixer Uppers

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					You've bought a house, a fixer-upper you can make some money on. What
improvements and repairs should you make? First of all, you need to know this before
you buy, as I explained in another article. Before and after you buy, though, you need
to have some simple rules with which to start analyzing possible fixes.
  Return On Investment
  A young couple was very disappointed when I told them there house was worth
$110,000. "We just put $40,000 into remodeling the kitchen!" they told me. I looked
at the kitchen. It was nice. They had added $10,000 in value to the house by spending
$40,000. This is a classic example of a bad return on investment.
  With fixer-uppers, you have do things which give the most "bang for the buck." Aim
for a three-to-one return on improvements. If you're going to resurface the driveway
for $1000, it better raise the value of the home by $3,000. Even when you're just
guessing, keep this three-to-one formula in your head, if you want to invest safely.
  How To Fix A Fixer-Upper
  With things like new curtains, you can't really estimate the increase in value. What
you can do, though, is group together the many small repairs and improvements you
are considering, and imagine how the house will look when you are done. Then you
can estimate whether you will have increased the value enough to justify the cost.
  It often is in the small details that you'll get the best return on investment, so look at
these first. A new mailbox, flowers on the porch, a raked yard and trimmed trees - $30
total if you do the work yourself - can make a big difference in the first impression
potential buyers have. First impressions are important.
  Other small investments that pay big include shiny new switch covers (less than $1
each), shelves, a birdhouse, new doorknobs, new light fixtures, curtains, new rocks or
wood chips on outdoor paths, new faucets, new woodstain on decks, and general
cleaning. Stand in front of the house and imagine what it might look like with various
small improvements (flowers, wood-rail fence, birdbath, etc.).
  The Big Fixes
  Obviously, there are things that just have to be repaired. The basic systems must
function. Improvements, though, should be subject to the three-to-one rule. You may
have to get creative here. An investor friend of mine once had a wall put up, and for
less than $1000 created a new bedroom, probably raising the value of the house by
$8,000. Now that's a good return on investment.
  Bathrooms and kitchens are important. A $1000 updating of a bathroom can add
$4000 in value to a home. Spend $2000 wisely in the kitchen (New fridge, re-finish
the cupboards, add a garbage disposal, etc.), and you can add $8000 to the sales price
of the house. Look for changes which are most universally valued (don't paint the
kitchen pink because YOU like that color), and be sure you get a decent return on
investment.
  Depending on the fixer-upper, there are many potential improvements that can be
worth doing. These include adding a carport, new doors, fences, gazebos, sheds,
painting, carpet, benches, a new closet, a new toilet, a new stove, a shower/tub
surround, and trees or bushes. The bottom line is the bottom line: be sure anything
you do returns more than you spend, preferably three times as much.
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posted:2/12/2011
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