You walk into the house with high hopes, but almost immediately have second thoughts.
After all, the home looks great from the outside and is in a neighborhood you really like, but once inside, you see that the carpet is a little worn and stained, the tile in the kitchen is outdated, and the fixtures throughout look like they were the new trend – in 1985.
But before you turn around and walk out, on your way to look at a dozen newer homes that same day before making an offer, I encourage you to give it a moment and take a second look.
That’s because one of the biggest mistakes people make when buying a home is to pay for someone else’s upgrades.
On the other hand, a home with good “bones” that’s in the right location, location, and location but just needs some TLC can actually be a wise investment. In fact, that kind of house is a golden opportunity for first-time homeowners, investors, or just someone who wants to walk into a home with potential sweat equity.
Basically, instead of paying for the upgrades and remodeling that the homeowners have already finished (reflected in a higher purchase price), why not get the price at a much more conservative number, do the simple and easy fixes on your dime and time, and realize the profit, yourself?
Buy a home that’s listed at less than marketing value and you could be the one profiting from these cosmetic upgrades, not the home seller!
In fact, I’ve seen buyers come into a situation where there’s the potential to realize $5,000, $10,000, or even $25,000 in equity just by upgrading the house with cosmetic fixes – and within a few short months.
But too many homebuyers ignore the potential for a great investment because, well, because it’s “dressed in overalls and looks like hard work,” to paraphrase Thomas Edison.
I see it again and again, and for several reasons:
Sometimes, the buyers are relatively inexperienced when it comes to the time, cost, and process it takes for these upgrades. It might even be their first home, so just the thought of a leaking toilet frightens them.
Most people don’t have the skill to do the work themselves, of course, and maybe they don’t know a reliable contractor or handymen that would help them be comfortable with the process.
Other times, they move into the home, and a significant remodel is untenable since they’re living in the space. If you’ve ever stayed in a home undergoing work and experienced the mess from sheetrock dust, muddy footprints, and more, then you know what I’m talking about!
Or, homeowners sometimes have SO many projects that they want to embark upon in and around their house that they fail even to get started – or complete – one!
Furthermore, when someone first buys a house, it’s expensive enough to go to Target and purchase shower curtains, area rugs, and basic kitchen goods. Despite your best intentions, these upgrades or fixes could easily fall further down the Honey Do list.
And let’s face it: a house looks GREAT with brand new upgrades.
When we’re out looking at homes and considering making an offer, you naturally are attracted to the house that looks the nicest. The last thing you want is to buy a home that’s slightly dirty, outdated, or requires significant repairs. After all, no one wants to make a lateral move from their current home – or even take a step backward. We all usually want bigger, better, and much nicer when we’re out home shopping.
But I’m here to tell you that some incredible financial opportunities are hidden beneath that dirt, dust, and dated fixtures.
Here’s why:
It’s easy to identify the upgrades, repairs, and sprucing up that aren’t too difficult or costly but will really boost your home’s appearance – and its value.
Together, we call these “cosmetic fixes,” and savvy real estate investors often call properties that are undervalued because they need a little love, “cosmetic fixers.”
Just how lucrative can these cosmetic upgrades be for your property value?
While it’s not an exact science, a national survey of home buyers estimated that for every $1 you invest in a cosmetic upgrade, repair, or remodel, you could potentially yield about $5 in extra home value.
Of course, that’s just one estimate, and you won’t realize the profit on a house until it’s time to sell (or refinance) it, but the point is that there are plenty of minor repairs and upgrades you can do that will only require hundreds in – but pay out thousands.
So, what are some of these cosmetic improvements we can make?
- Replace linoleum flooring (especially in kitchens and bathrooms)
- Rip up old and dirty carpet. You can replace with new carpet, tile, laminate wood flooring, or there may even be original wood underneath! Score!)
- If you don’t want to start ripping up the tile in your kitchen or bathroom, just scraping out the old grout and re-grouting will make it look bright and new.
- One of the best ways to add curb appeal is by pruning, planting trees and flowers, laying new mulch, and other simple landscaping you can do on the weekends.
- The single easiest way to make a home look and FEEL newer and nicer is with a fresh coat of paint! This isn’t confined just to the walls, as you can sand down and paint old kitchen cabinets that are in good shape without replacing them.
- New window coverings, shades, etc. Let light in, brighten a room, add color, and make it look more modern or spacious just by addressing the windows or slider.
- New fixtures. You can make a home look like new just by focusing on the details. It’s not expensive or difficult to update doorknobs, faucet sets, lighting fixtures, and the other small things that add up to make a big difference.
- New bathroom vanity. Without tearing out tile or replacing the whole shower, you can make a bathroom like brand new just by replacing the sink vanity (and maybe the commode, too). They sell pre-assembled kits at Home Depot and other stores that are cost-effective but will make your bathroom look like those in a luxury hotel.
You’ll probably start noticing that this list matches up pretty closely with the list of basic home repairs you can make that will earn you the highest Return on Investment when selling.
For instance, I’m listing a home for sale that’s a perfect example of a cosmetic… Well, I don’t even want to call it a “fixer” because nothing NEEDS to be fixed – it’s perfectly livable, clean, and nice. However, the features, amenities, and design are somewhat outdated since it was built in 1968.
But if we go down our checklist of what we’re looking for in a great real estate investment:
- Good neighborhood.
(Well established, steadily increasing values, maturing landscaping and close to plenty of amenities.)
- In a top-rated school system.
(Near top-rated Elk Grove high school.)
- Great bones.
(3 beds and 2 baths, spacious at almost 1,700 square feet, well-designed floor plan, open and inviting – but also sturdy.)
- From a respected builder.
(This home was built by Guttridge Construction, which has a well-earned reputation for putting up quality homes.)
- Easy to alter the floor plan.
(These models are known for easy-to-remove interior walls, so you can expand your living area, create a great room, etc.)
- Motivated sellers!
Of course, these sellers could put a little money into the property and probably sell it for substantially more, but they are motivated to find a buyer sooner or later and sell it in its present (perfectly nice) condition.
- Older home charm.
Sometimes, the fact that it’s not a newer home is an asset! Older homes typically have larger lots, are more likely to be single story (sought after by buyers), and can even have real brick fireplaces and other charming features.
- The price is right!
How much is this fantastic home that is ready for a little cosmetic TLC?
Contact me for details and a private showing!
A Better "Way" to Real Estate 