Is the American Dream, just a dream? Or, is it still the investment that our families had during the post war buildup of our modern day communities. I believe that with the correct frame of mind, you can still position yourself in the buying and selling of property- but it is getting more and more difficult!
Broadly, People buy homes for two reasons-
- To gain a tax deduction because of mortgage interest.
- To further surround themselves with ‘Like persons’.
As I was cutting my grass this Spring, cutting every 4-5 days to avoid massive clumps of grass from littering my yard- I had an idea- I should rent a house where I want to live, negotiate the exterior services into the lease and purchase a multi-family property as an investment!
I stopped and laughed about the idea, while answering my phone getting a Buyer lead off of a sign. The Buyer was calling for a $1.3M condo with a City view and they couldn’t put together 5 words to utter “how much is this house”. I cordially answered the question and informed her that its only the top floor and its two bedrooms. While you may think that I’m complaining about the fact that someone is interrupting my mowing, the moral of the story is simple- people are looking for Real Estate all the time. It’s a compulsion for some- enough that the industry brands them ‘Looky Loos’ (this Open House is for you!).
Real Estate is a fun hobby for some Buyers, it’s a luxury for some Sellers’ within some niche markets, it’s a business for builders and it’s a lifestyle for me as an Agent. Definitions are hard, but the reason why it’s a lifestyle is because it is the sweat on my brow. I get fist pump happy when the phone call comes in to List, when a call is received and the recipient is responsive, and when I successfully negotiate a deal.
What most don’t understand about Real Estate is that it’s all risk. My house has yet to write me a check and I tend to over improve our homes which pushes me further into the red. For the group of us who are Agents, Builders and true investors (longer ownership than 10 years) that is built around the risk/ reward model. If you take high risks, your rewards should be sharp and high. If your risk is low, your reward should be equal. The pendulum can only swing so far!
The solution to mitigate this is the model that I brainstormed… or a version of such. Balancing the ownership risk is a tough balance. My advise is that look at your home as a flatline asset and never appreciate it over a 10 year course and this is why I would recommend, first, trying to buy the property right. It’s the first real rule of Real Estate, buy with equity, which means you need to buy the ‘shell’ with money in it for improvements. This is critical if your Buyer is needing to preserve an equitable position in the ownership of the property. If the owner has already “written off” the successes of the property, then you can bludgeon, otherwise, approach with caution. Per HGTV “(http://www.hgtv.com/home-improvement/which-home-improvements-pay-off/index.html)
The importance of different maintenance issues varies with geographical location, too. Roof replacement (average cost: $11,376) was very important to buyers in the east, according to Remodeling, where homeowners recouped an average 96.3 percent of the cost. In the Midwest, the average return for the same improvement was just 71.1 percent. Cincinnati is more within the numbers of the Eastcoast, but does display strong characteristics of the Midwest. So, I am going to make the assumption of 90% return of investment. With these numbers, the way that I would justify it is that you have a
TIP: Know your situation better than your neighbor. You can accomplish this by hiring John Payne and our Team of experts to Buy and Sell your properties.
If you would like a free market analysis, please call me at 513-500-7474 or email at john@payne-team.com
