You’ve bought a house, a fixer-upper you can make some money on. What improvements and repairs should you make? First of all, you need to know this before you buy, as I explained in another article. Before and after you buy, though, you need to have some simple rules with which to start analyzing possible fixes.
Return On Investment
A young couple was very disappointed when I told them there house was worth $110,000. “We just put $40,000 into remodeling the kitchen!” they told me. I looked at the kitchen. It was nice. They had added $10,000 in value to the house by spending $40,000. This is a classic example of a bad return on investment.
With fixer-uppers, you have do things which give the most “bang for the buck.” Aim for a three-to-one return on improvements. If you’re going to resurface the driveway for $1000, it better raise the value of the home by $3,000. Even when you’re just guessing, keep this three-to-one formula in your head, if you want to invest safely.
How To Fix A Fixer-Upper
With things like new curtains, you can’t really estimate the increase in value. What you can do, though,...