5 Ways to Get the Most for Your Money in a Seller's Market
Furry pink carpet, sea-foam green bath fixtures and endless layers of linoleum flooring were not featured on my "First Home Must Haves" list. In fact, after walking in the front door at our showing appointment, I was immediately ready to walk out the door without giving an offer on what became our first real estate purchase. The reality of the situation was that my husband and I were first-time buyers in a seller's market with prices only going upward. We were tired of paying someone else's mortgage and wanted to build equity of our own. To avoid sinking in debt, we had to find an affordable house with the potential to grow our money. Now, only two years later, we are anticipating a $65,000 profit in the sale of our home next year. Here are some tips to help you break into the housing market, while growing your money at the same time.
Look Past the Ugly
In an age when even your cellphone is expected to look pretty, it's hard to look past images and sights that are unappealing without a sour look. Pink carpet may be a style inherited from the 1980s, but it's nothing cost-wise compared to a cracked foundation or rotting drywall. In our case, what looked to be a horrific mess was simply a disguise for the beautiful hardwood floors that hid underneath. With easy-to-install laminate, a can of paint and Pinterest readily available, it's easier than ever to dramatically change the look of your house for an affordable price.
Assess Your Abilities
Being handy is beneficial when looking for affordable housing, because the less people you have to pay, the more profit you will gain. Materials are one thing, but labor adds up quickly. We paid one professional for our entire home renovation. While we did complete some minor restructuring to be rid of the dreaded bathroom fixtures, my husband luckily had a working knowledge of plumbing and installing drywall. Have a brother-in-law who works in the electricity field? Offer him a case of beer in exchange for running a few new electrical outlets for you. Despise painting? Make it an event and invite your friends over.
Most importantly, be sure to be realistic about your abilities and available resources. If you plunge into a project without much experience, you may cost yourself more in the event that a professional needs to come and fix your work. Take your time assessing the work required during the walk through of a house, as well as how confident you are in the abilities of yourself and your resources to complete the necessary projects.
Be Willing to Commit the Time and Effort
Renovations, no matter how cosmetic-based, take time. Don't get frustrated when your projects take longer than anticipated. Create timelines for yourself to help you stay on track and finish one project before moving onto the next. With multiple projects on the go at once, you risk becoming overwhelmed and agitated. The finished product will be well worth the wait! Be prepared to put in the work if you want to make the most out of your money.
Do Your Research
Ask your realtor or research for yourself to find out what other houses in the area are selling for. This step will make sure that the price is worth the effort. A house may be listed for an affordable price, but if other houses in the area are consistently listed at a low price, you won't have the opportunity to grow your money. Some areas will consistently sell at lower prices than others. You want to make sure you are buying in an area that is appealing and thriving.
It doesn't hurt to research after you have purchased a house either to see what your neighborhood is selling for. We had the benefit of watching houses in our neighborhood increase in price during our time living there. With a three-year mortgage term, we decided to sell earlier to ensure we could capitalize on the work we had done.
Take Advantage of the Seller's Market
If your space allows, rent out the lower level of your house. In the area that we live in, quality rental space is high in demand. Rent will help to cover a good portion of your mortgage costs, leaving you more money to put into upgrades or to save for the future. Make sure, however, that you don't choose a higher-priced home with the plan that you will be renting. It is important that you are able to comfortably afford the mortgage payments on your own in the event you are without tenants.
*Image courtesy of Flickr's Creative Commons