How to Profit by Investing in Cheap Properties

With the right information any investor canprofit by investing in cheap properties. Butremember you are making a long-terminvestment. Property values tend to increaseover time, and acquiring tenants to help paydown your mortgage while you wait to sellmakes this a valuable investment vehicle for thefuture.

Know your home inspectorHome inspectors know thebuilding codes for your areaand can offer invaluableadvice about the integrity ofyour property’s structure.

Not all home inspectors are created equal. Someare qualified to perform WETT certification forwood-burning fireplaces, others have thetraining and tools to detect hidden moistureissues, and some home inspectors are qualifiedto offer only basic inspection services.

Be sure you know the scope of inspection andbe prepared to consult a second home inspectorand or other specialized professionals if yourequire additional information.

Know your market

Your real estate agent can offer you a wealth of advice on neighborhood markets. A market analysis, sometimes called aCMA or market evaluation, includes information about the market value of otherhouses in the neighborhood and how the property you are considering compares to your neighbors’ homes.

You should ask for a CMA:

Prior to purchasing the property: This helps to ensure that the current value of the property and the surrounding area are considered during the negotiation process.

Prior to renting the property: Remember, realestate is a long term investment and knowingthe current rental value of the property can helpyou recover your renovation cost – which is asimportant as finding the right tenant to paydown your mortgage.

Prior to listing the property for sale: This willensure that you are listing the property at theright time. As an investor you want to buy lowand sell at a time when the property values arehigh. Your real estate salesperson will let youknow if you are in a buyer’s or seller’s market.Market evaluations can also be tailored toinclude demographic information for theneighborhood. This allows you to customizeyour renovation plans accordingly.

Know which renovations add value

Your future buyers will be most impressed by kitchen and bathroom upgrades, as will tenants. So consider purchasing new appliances, putting down ceramic floors and adding stone countertops. Renovations that save energycosts, such as roof repairs, windows and doors, add long-term value for potentialtenants as well as for future resale.

Using the demographicinformation for thearea, determine whattype of renovationwould be most valuable

for that market. If the demographics indicatethat the area is sought after by senior citizens,then renovations to make the kitchen,bathrooms and entry more senior accessiblewould certainly be viewed as valuable.

Keep in mind, however, that there is a delicatebalance between the value of the renovations youmake and the renovations your neighborhood cansupport. For example, doing renovations to raise thevalue of your income property to $400,000 isn’tadvisable in a neighborhood with $200,000 homes.

With these tips in mind, your long- term investmentwill work for you.

Randy Bettwww.BetterGroupRealEstate.ca