Value-Added Real Estate Strategies

In a swiftly appreciating market all you’ve got to do to make money in real estate is purchase the property. In a depreciating marketplace all you can do is hunker down until the market turns. The good thing is that historic appreciation rates are positive–in excess of eight per cent over long spans of time–so the market will almost certainly turn sooner or later. In a standard — marginally appreciating–or apartment market, the perfect way to make money in real estate would be to add value to the house.

Cosmetic Improvements

A decorative fixer is a building that only needs improvements that will enhance its appearance instead of its systems–like heating or plumbing–or structure. Cosmetic improvements are the simplest and cheapest repairs and remodeling projects you can undertake. And they often bring the best return on investment. Replacing a front door may bring a 130-percent yield on investment, based on”Remodeling” Magazine. Exterior painting and landscaping may turn the worst-looking home on the block to the best in a single moment. Curb appeal may not sell the home, but it is going to get buyers in the doorway. In the inside, a comprehensive cleanup requiring nothing more than elbow grease not only creates a difference in sales price, it helps sell the home more quickly. Replacing carpet and linoleum, light fixtures and door components are inexpensive improvements that add value to the home.

Change of Use and Addition of Units

Zoning is often thought of as an impediment to development, but actually making use of zoning regulations may add a great deal of value to your properties. If you are considering buying a two-unit building in an RH-3 zoning district, then you may be able to bring a third unit on the house. You may purchase a cheap home on a commercial lot and find it would be worth more if you demolished the building and sold the whole lot to a franchise or chain shop. Think Starbucks. Is it a very large lot? Believe Walgreens. You may be able to alter the use before making any structural changes. Depending on the condition subdivision code and local land use regulations, you may be able to turn a apartment building into condos through the subdivision mapping process. In areas like San Francisco the regulations are restrictive, however, the payoffs are large. You can turn into a two-unit apartment building into condos there if the two units are owner-occupied.

Additions inside the Building Envelope

If it is possible to locate a building with a large, undeveloped attic or basement, you have the potential of adding square footage inside the building envelope–a good deal simpler and cheaper than building an addition. Headroom is occasionally a problem in buildings like these, but excavating a few feet in the cellar and including a dormer window in the loft aren’t insurmountable obstacles.

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