Self Help

In buying a property to create value, no rules or suggestions apply to all cities, all types of homes, or all kinds of tenants or buyers. Features that one person loves, another may hate. What’s popular in California may look out of place in Kansas. Today’s most faddish options may become outdated tomorrow. What suits you may not appeal to the tastes and lifestyles of most people. Money spent for a remodeled bath in Atlanta may pay back $3.00 for each $1.00 invested, while in Milwaukee, returns for the same improvements may fall to 50 cents per dollar spent.

With so many variables entering the value equation, before you plan your improvements, profits dictate that you learn what features your future tenants or buyers will pay for. When you plan to create value, you can’t let your personal tastes or preconceived notions stand unchallenged. Instead, like smart home builders who want their homes to sell, you’ve got to research your market. You need to develop a market-based improvement strategy.

Ask local Realtors and property managers to tell you the “turn-ons” and “turn-offs” for tenants and home shoppers. Try to identify unique niches for uncommon, yet highly desired features. Tour new home developments and popular apartment complexes. Notice colors, decorating themes, floor coverings, and floor plans. Discover the models, features, and amenities that are selling best. Which ones are rarely chosen? Which features are functional, rather than merely glitzy? What types of apartment units command the highest rents and suffer the lowest vacancies?

Visit open houses to excite your creative impulses. Look for ways other property owners have remodeled, redecorated, or redesigned their properties to make them more livable or more appealing. Talk to friends, relatives, or acquaintances who have remodeling experience. Buy a box-full of those supermarket and bookstore guides with titles like 1001 Ideas to Improve Your Home or Apartment Living. The more creative ideas you can come up with, the better you can design a profit-generating improvement strategy.

When shopping for a property with an eye toward creating value, corral your enthusiasms as well as your negative reactions. Don’t dwell on whether you “like” or “dislike” a house. Instead, answer this question: Based on what you’ve learned from market research, can you spend $5,000 to reap a return of $15,000? In other words, don’t judge a home “personally.” Judge its potential profitability.