Todays Post was generously created & provided by Sarah Velasquez
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How to Approach Your Fixer-Upper Property
If you've renovated a fixer-upper home with a view toward profiting from this property, there's a basic choice to be made once the renovations are complete: whether to rent out the property or try selling it (commonly called "flipping" a property). Which of these options is the most attractive for you will depend on your own personal circumstances, the specifics of the property itself, and the current state of the housing market.
Here, The Contractor's Site investigates the major factors you'll need to take into account for each choice.
Renting Your Property and Being a Landlord
Renting out a property can be an effective way to earn passive income. However, several things need thinking through:
• Gross monthly income the property will generate from rent
• Operating expenses such as property insurance, taxes, and routine maintenance
• Capital expenditures (usually large and unexpected, such as repairing damaged roofing or flooring)
Budgeting for these will give you an idea of the net returns you can reasonably expect. In addition, being a landlord is a full-time commitment. This might include dealing with vacancies, bad tenants, and property damage. You need to decide whether the potential risk, time, and expense are something you can sustain. If not and you can afford it, you can hire a property management company to help vet tenants, collect rents, and arrange maintenance.
Selling Your Fixer-Upper
Fixing up a home and selling it at a profit is possible, but not easy. Assuming you've already completed your renovation process, there are four major factors you'll need to consider in determining whether you can really hope to make substantial profits on a sale.
If you need to meet a certain sale price to make a profit, it's important that the property is in a neighborhood where buyers are likely to want to meet that price.
Renovations Can Only Add So Much Value
Even with professional remodeling services at your disposal, renovations can only go a certain distance toward actually increasing a home's sale price. Some renovations are more valuable than others, especially those that focus on practical upgrades and fundamental cosmetics. It’s also a good idea to go for renovations that support the current needs of potential buyers and to work with professional contractors for the best possible output.
What Kind of Housing Market Are You In?
You've probably heard the terms "buyer's market" and "seller's market" in real estate. These refer to the market absorption rate. It's a ratio of the total number of sales during the most recent fiscal quarter to the number of active listings over the same period. The higher this ratio is, the better your chances will be of securing a good price.
Get Professional Help
Above all, use a real estate agent. A real estate professional will have the best grasp of the dynamics that impact the sales price of your home. They also have access to a larger pool of potential buyers, many of whom will prefer to have an agent involved.
How to Decide
If you have the time and energy to commit to being a landlord—or your budget provides room for hiring a property management company—renting out your fixer-upper can be a solid option. If the location and the timing are right and you can afford the help of a real estate agent, selling might be the better choice.
Looking for a pro to help make your property a more desirable one for renters and buyers alike? Explore The Contractor's Site for current postings!
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