One of the best thing that can be done by homeowners
(buyers especially) and investors, says Dean Graziosi, is to buy ugly ducklings
which can be a "pretty good" investment strategy, if you follow
some basic rules. Learn why these properties can give luxury dilapidated
returns on real estate investment, especially if you spruce them up.
Whether you're buying a home for rental income as a
primary residence or a second home or even a vacation home, the strategy to
purchase "the worst house on the block"
can be a rewarding one to follow.
When assessors determine the market value of a home,
they do so in comparison with other similar houses in the same general
location. By comparing and contrasting the pros and cons of comparable homes,
they usually generate reports referred to in real estate circles as
"comps". Because comps are an attempt to average the value of homes,
they generate a price range that runs from small to large environment. Buyers
and sellers comps study to figure out how much to give or ask for a house, and
that helps to define the rate goes for cash at a time and in any given market.
But, for example, if you do own a mansion - which had
all sorts of expensive upgrades - in a mediocre neighborhood houses, chances
are that buyers will not offer what the house is worth or what you put in it.
They would rather spend the same amount of money and buy a more prestigious
neighborhood lined with mansions similar looks and luxury homes. Similarly, if
you have an old shack surrounded by mansions, the odds are in your favor that
the property value will increase because people usually pay more to be in
beautiful neighborhoods. Your home may be less desirable accessible only
opportunity to enter an otherwise expensive and exclusive neighborhood, so you
can charge a premium for this gift.
Among investors often said that you should not buy
the best house on the block because they have the least amount of room for
discretion to raise prices. In fact, homes that are "best" will
normally see their values pulled down by less desirable properties in the
vicinity. Buy a home in a bad neighborhood market and physics works quite the
opposite, however, raise higher values. When you buy the cheapest and
"worst" home on the street, you have much more room to grow your
value before it hits a ceiling or plateau. In essence, you are capturing
built-in equity by buying bad.
If you fix this kind of property, Dean Graziosi
believes that you can add substantially to her own value while you gain also
the respect and admiration of other homes in the area. We all appreciate when a
neighbor spruce up their place to add value and beauty to our street, and make
good neighbors is one of the most important aspects of property investment success.
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