Renovating for Big Reward
Why would anyone want to bust their butt, fixing up run-down houses?
The answer is simple: For very fast profit!
If you really want to accelerate your equity and property portfolio growth, you need to apply a buy, fix up and hold, investing strategy.
Adding value to run-down homes through cosmetic renovation is one of the most powerful leverage tools available to Real Estate Investors. You have the power to manufacture your own equity in a very short time, compared to traditional buy and hold investing methods.
This instant increase in equity provides you with a down payment for the purchase of your next property.
One rehab or renovation project alone, can make you instant capital gains of 10 to 30 per cent (some of my clients have achieved returns of up to 60 per cent).
With the value adding approach to real estate investing, you will instantly profit from any type of market conditions. By holding the property, the combination of buying in a growth area and adding value make this type of investing extremely profitable.
There are two types of Equity that you can increase:
1) Natural Growth Equity – The increase in market value of your property due to the growth of the suburb or town. This is a key point in the long term effectiveness of your strategy.
I said above that you can increase this equity? Well you will if you get the suburb or town selection right in the very beginning.
2) Manufactured Equity – This is what you create when you improve the property.
Imagine buying, renovating and adding an instant 20% capital appreciation to your property, and then seeing values in that area take off by another 20 to 30 percent over the next twelve months!
This strategy for Real Estate Investing actually fuels itself. The hard work is really just in the beginning, and that’s only research.
Find your area, know your prices, and go to it. Once you have completed the 1st, you have the equity to do the 2nd, in that one you will have the equity to do the 3rd and so on…