This video shows you the top 5 most profitable renovations for your real estate investing business. Stop wasting money on repairs and upgrades that do not affect the actual value of the home.
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Top 5 Most Profitable Renovations For Real Estate Investing
Joe: Hey, it’s Joe Crump. What are the top five most profitable renovations? Real estate investing 101. These are going to be determined by whether you’re going to keep this property long term, or whether you’re planning on flipping it.
Joe: If you’re doing a quick flip, you’re going to be doing – you have to make sure that it’s habitable. You have to make sure that the structural aspects of the property work, the furnace works, the roof doesn’t leak. It’s got to be able to pass an FHA inspection. It’s got to be able to pass a buyer’s inspection. So it has to be structurally sound and in good repair. That doesn’t mean that you have to put in a new furnace. If you’ve got a ten-year-old furnace in there and it’s working properly, you don’t need to replace that, necessarily.
Joe: What you do want to do is go in and make that property look really nice. So, you go in and you put in new carpet. You work on the kitchens, you work on the bathrooms. You make them sparkle. You put your money there. Maybe new fixtures, new sinks. You can put your money into those places most effectively. And having clean carpet throughout the house, you know, pretty carpet, brand new carpet throughout the house, that makes a big difference. Of course a coat of paint really helps a lot.
Joe: So, you can over-improve a property. And you have to be careful even when you’re flipping a property that you don’t over-improve it. You may not want to go out and put in a whole new set of kitchen cabinets. You may want to paint the cabinets that are there and put new knobs on it. There’s a lot of things that you can do that are not that expensive that can do that. You always have to make sure you’re paying attention to how much you can sell that property for and how much it’s going to cost you to repair.
Joe: Remember, most rehab costs, the cost of the material, and then you double the cost of the material to get to the cost of the rehab unless you’re doing the work yourself. If you’re doing the work yourself, you can do rehabs a lot cheaper. But, if you’re doing the work yourself, that takes you away from going out and doing real estate deals which will make you a lot more money than swinging a hammer.
Joe: If you’re swinging a hammer, you’re probably leaving a lot of money on the table because you should be doing more deals.
Joe: A lot of people will only do one rehab at a time because that’s all the money they’ve got and they think that they’re limited to that and they need to get that property done, they need to get it fixed up, they need to get it sold, and they need to get the cash so that they can go out and buy another one. And so it takes them three months, six months, a year, to do that. And they can’t flip very many properties. But if they’d learn the zero down structures, it would be a lot easier for them to do that and they could do a lot of properties instead.
Joe: Now, the other type of property is a property that you’re going to hold on to. Now, you want to keep a property for the long term because that’s what’s going to make you wealthy. So if there’s any way to do that, you want to do that. But the best way to do that is if you don’t have any money into the deal, or you have only a little bit of money into the deal, or maybe you buy the property Subject To, or on a Land Contract. You don’t have any money into purchasing it, but you have to put money into cleaning it up.
Joe: So, maybe you put new carpet in and you clean things up and you make it habitable and you clean up the furnace and make sure everything’s working properly. If you have a nice property you can typically get nice tenants. If you have a lousy property that’s in a lousy condition, you’re going to typically get tenants that don’t take care of that property because they don’t care enough to buy a property that’s in good shape.
Joe: Now, that doesn’t mean that a property that’s in good shape won’t eventually get damaged by the people that are living there, or even get trashed. It’s rare that I see properties that just get completely trashed, although if somebody’s in a property for five years, seven years, ten years, over that period of time, and not a lot of maintenance has been done during that time, then you walk into it and it feels like it’s been trashed and you have to go in and you have to clean that property up and you have to put several thousands of dollars in to it to get it back into shape in order to rent it out to the next person.
Joe: But most of the time, if they’ve only been in it for a year or two years, three years, they’ve got a security deposit, or you’re doing a lease option so you’ve got a lease option fee, and you can protect yourself and you can go in and you can get that property cleaned up for the next person that comes in and keep that property for the long term.
Joe: So, the renovations you do are going to be determined by what you’re planning to do with that property. And the ones that stick out the most to anybody who’s either a buyer or a renter are kitchens and bathrooms and carpet and paint. Everything else, you know, they can kind of gloss over and it doesn’t have to be perfect if you’re putting a tenant in there. But you want to make sure that it’s good enough so that you get a good enough tenant who’s going to take care of that property.
Joe: All right. I hope that helps. Subscribe to my channel, go to my website JoeCrumpBlog.com and sign up for my free newsletter. Get involved in my mentor program ZeroDownInvesting.com, or check out my software PushButtonAutomarketer.com which will help you find seller financed deals like this.
Joe: All right. Thanks.