Buying an Investment Property that Needs Work
Perhaps the best way to gain equity in a property is to buy an investment property that needs work. The trick is to find the right type of work.
On one end of the spectrum is a property in pristine condition. In this scenario it’s very challenging to get a great deal that enables you to build equity through putting in the work, simply because the property’s highest and best use is already realized.
On the other end of the spectrum, the property is a total hot mess and needs a complete gut job. These projects tend to cost $400k - $700k+, depending on the situation. These projects won’t work for your average mom and pop investor either - these are best for developers with deep pockets.
And then, somewhere in there is the sweet middle. The sweet middle is a property like this:
Great layout and excellent location
Looks crummy, but the work is mostly relegated to redoing kitchens, bathrooms, and small cosmetic work like floors, painting, and landscaping
I can work with you to find that sweet middle and help estimate what work is involved and what the likely cost range will be. I can also help you find the right contractor(s) for the job, determine how long the work will take and finally what the updated property will be worth.
Once you’ve got that equity, it’s really up to you what you want to do. You could flip it and rinse and repeat. Or you could hold it for the long term.
If you are thinking of buying a property in need of some work, but not too much, and want to talk numbers, give me a call!