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Don’t Buy That Fixer-Upper (Unless You Know These 4 Things)

In 2012, Alessandra Pollina and her husband, Ondre, were looking for a property that would need no more than some cosmetic changes and upgrades. But because the price was right, they ended up with the ultimate fixer-upper: a two unit, single-family-style home that was already gutted to the studs.

They were excited about its potential, not to mention the one-half acre of land the house is sitting on. “That’s unusual for Boston,” Pollina says. “It’s the biggest backyard ever.”

Four years and many renovations later, Pollina estimates her home in the Dorchester neighborhood is worth (drum roll, please) an epic56% more than it was when she bought it. Wow, talk about a return on investment.

The moral? A fixer-upper isn’t necessarily something to eschew. If the right  things are wrong with a house, you could not only turn it into your dream home, but also earn serious equity (wealth building!) in the process.

Oh, and don’t assume you need to be a DIY master to make it worthwhile, either. Time and patience may be all you need.

Here’s how to tell if that fixer-upper is a keeper — or if you should keep walking.

First, Evaluate the Price

If it’s a fixer-upper, it should come at a fixer-upper price. Duh, but that’s a reminder NOT to fall in love too quickly with a home that the listing says “just needs a little TLC.” Do your homework first, and if the price is right, then fall in love.

Find out what similar homes in the neighborhood sell for and how tricked out they are (with amenities and materials). A REALTOR® can help you figure that out. And that will tell you how much money you can invest in the home before you over-improve for the neighborhood, a mistake you want to avoid if you plan to sell in the future.

Wendell De Guzman, a Chicago real estate investor who renovates at least two houses a month, recommends treating the remodel like a business, not a hobby. Determine your budget based on the market value of homes in your neighborhood, because you’re not going to sell for more.

“It doesn’t matter how much money you can put into the house,” Guzman says. “You’re limited by the market value of what nearby houses are selling for.”

Next, Start Evaluating What Improvements Are Needed

The best fixer-uppers offer lots of opportunities for “instant equity,” which means if you sold the home tomorrow you’d pretty much get that money back, unlike other projects which you may never get your money back on. ( A swimming pool won’t help you when it comes time to sell. You’ll spend any gain on insurance and upkeep. On the other hand, you can’t put a dollar value on an afternoon with family and friends. Read More In Do Swimming Pools Add Value to Homes? Swimming pool, anyone?)

Some can be as simple as painting or landscaping, which you can accomplish with sweat equity, De Guzman says. In fact, the Pollinas started their rehab with high-value, low-effort landscaping, since it’s the first thing people see. They raked, brought the grass back to life, planted fruit trees and a veggie garden, and enjoyed the reaction: “People are so surprised and impressed,” Alessandra says.

Other tasks — the Pollinas focused on the kitchen next — may require the work of professionals and cash to pay them. It’s those projects you want to carefully evaluate against the home’s price.

Which Hire-a-Pro Projects Add Instant Equity?

Fact: While most home improvements add some equity, some are consistently at the top of the heap. Another thing those equity champions have in common: They usually require the help of a pro, but the cost can be instantly  worth it.

Based on data gleaned from the NATIONAL ASSOCIATION OF REALTORS®’ “Remodeling Impact Report” (RIR), if these four projects are on your fixer-upper’s list of must-haves, then you may have found your dream equity-builder:

1. New roof: A new roof may not be the remodeling project of your dreams — until you realize it could actually pay  you. You’ll spend about $7,600 to install it (based on a national average determined by contractors responding to the RIR survey), but when you sell, it could recoup 105% of that or $8,000, according to REALTORS® surveyed.

2. Hardwood floors: It costs about $2,500 on average nationally to refinish hardwood floors. If you bought a house that already had refinished hardwood floors, you could pay about $2,500 more for the home. But if you’re looking at a fixer-upper (at the right price) that needs the floors redone, that’s like getting the floors for free! New hardwood floors are also a good choice at a cost of about $5,500 to install, and could recoup $5,000 of that at resale.

3. Insulation: A fixer-upper offers a great opportunity to replace or add insulation. New insulation costs about $2,100 on average nationally, and can recoup $2,000 at resale — as if saving 10% to 50% on your energy bill wasn’t compelling enough.

4. New siding: Droopy, old siding can be great news on a fixer-upper. Vinyl siding costs about $12,000 to install on average nationally, and recoups about $10,000 when you sell. Getting a fixer-upper for a price that more than covers the cost of siding installation is, well, priceless.

While those four are pretty safe bets — homeowners who responded to the RIR survey gave them high happiness and satisfaction marks, too — almost any project can be worth it with a fixer-upper if the price is right. For example, a complete kitchen renovation can cost $60,000 and recover only about $40,000 when you sell. But if the fixer-upper is discounted enough, think how amazing it would be to cook in a kitchen you designed yourself.

Evaluate Your Ability to Deal with Disruption

Whether you’re a DIY Jedi or content to let the pros handle the remodel, if your patience is shorter than your potential home’s to-do list, a fixer-upper may not be a good choice.

Renovating a bathroom alone can take two to three weeks. Add hardwood flooring, a new kitchen, and siding, and you’re looking at a whole summer’s worth of rehab.

When considering a fixer-upper, evaluate the limits of your emotional energy as well. Inevitable project pitfalls and delays can be wearing. Only if you have the time, patience, and emotional endurance for a fixer-upper will it be a good fit for you. And only you can determine that.

But if you can budget your time and money — and employ the right fixer-upper strategies — you might find yourself with a double reward: A home that’s worth far more than you paid, and the joy of knowing you helped get it there.



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3 Must-vs-Lust Buying Tips to Avoid Overspending

When you embark on the home-buying process, your heart is filled with all the dreams in the world. It’s really easy to get caught up in the “I have to have ___________,  so I’ll cut back somewhere else ” game, even when you don’t actually know where that somewhere else is or if you can realistically cut back there.

This post will show you how to pare down the excess and make sure to get the things you really NEED.

Make a List of Wants

Start by making a list of everything you want in your house. If you love it, jot it down. Have your spouse or partner do the same thing in a separate document.

Once you and your partner have everything down, start sorting your wants by order of importance. What’s your No. 1? Do you need large windows? How about a sunroom? Double sinks in the master? You get the idea.

Come up with your top 10, and then compare your list to your partner’s top 10. What things appear on both lists? Those items should carry more weight because you both want them in your home.

Highlight the Important Stuff

Next, look at your list and consider:

  • The things that can’t be changed without a massive investment. I’m talking things like square footage, window size, and number of bedrooms. This is your heavyweight list. These things should take priority in your home-buying decision.
  • Features that are purely cosmetic, especially things that can be DIYed. These items should be moved waaay down the list or taken off entirely. Backsplash tile, paint color, and lighting can all be changed inexpensively and after you’re living in your house. You don’t want to pass up a fantastic house because you can’t see past a red accent wall.

At this point, you should have a combined list of 10 or so items.

My last tip is to figure out the priority of each one of the items. Ask yourself, would you be willing to give up item number 4, say, to have item number 5? Would you be willing to give up hardwood floors for a home theater room? This is the hardest question to answer, but it’ll put your must-haves in the right order.

I always picture this activity like an eye appointment when the doctor says, “1 or 2? OK, now 2 or 3?” Do that with your list! Pool or flooring? Flooring or yard size? Yard size or square footage? Make sense?

Bring Your List When You Look at a Home

As you’re out looking at houses, keep your list handy. Maybe you’re not willing to give up hardwood floors for a jetted tub, but would you be willing to compromise for a jetted tub and extra square footage? Refer back to your must-haves list often. It’s easy to get distracted.

Here’s a quick checklist that I use when searching for a home. If you answer “yes” to all of these, then a “want” may be worth the splurge — that is, if you can be sure that you’ll be able to afford the feature (in terms of your monthly mortgage payments and living expenses).

  1. Is it on both of your lists?
  2. Is it something that’ll be extremely expensive and difficult to change or add?
  3. Would you be willing to sacrifice something else to have it?
  4. Would you feel like your house would be incomplete without it?

Happy house hunting!


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Avoid These 6 Major Mistakes People Make When Hiring a Mover

Let’s get real: Moving is stressful. And when you’re busy finding a new place to live, selling your current home, and then packing up your entire life, selecting the crew who will move your stuff is likely last on your to-do list. That’s ironic, because you’ll be entrusting them with all your life’s possessions.

Even if you manage to hook up with The Most Amazing Moving Company Ever, we can’t promise bad stuff won’t happen. But you can prevent some unnecessary duress if you have the right team in place. The process starts by schooling yourself in what not to do. Read on for the top mistakes people make when hiring a mover.

1. Waiting too long

So you wait until the weekend before your move to make those calls to moving companies—after all, who cares? Well, if you procrastinate on your search, you won’t leave any time to do adequate research and get estimates. That means you might not get the best rate (spoiler: Moving’s expensive!), and worse—you could get scammed.

“There are times when last-minute booking can’t be avoided, but frequently it’s just a task that’s put off too long,” says Steve Weitekamp, president of the California Moving & Storage Association. “Delaying selecting a mover can reduce your options—and unfortunately, unlicensed and unethical operators rely on this aspect of human nature to take advantage of consumers.”

Take the time to get three in-home written estimates, Weitekamp recommends—and, time permitting, visit the moving company in advance of making your final decision.

2. Being a total cheapskate

No, you don’t want to pay more than you have to for a move. But beware of being too budget-conscious.

“The largest mistake you can make is going with the cheapest estimate,” says Dave Garrett, owner and managing partner of You Move Me. “The cheapest bid typically means that the company uses casual, inexperienced laborers who don’t care a whole lot about your things.”

Conversely, Garrett says, higher-end estimates almost always assure trained, professional, and experienced crews who will show up, smiles on their faces, and move your stuff safely and efficiently.

In other words: “If there is a hiccup, they will figure it out,” he says. “They’re not leaving your stuff on the front lawn.”

Weitekamp agrees: “Disreputable movers often lure customers with lowball prices and then hit them with unreasonable charges or, in extreme cases, even hold their belongings for ransom.” Yikes.

3. Not asking the right questions beforehand

“A professional mover will be happy to answer any questions you may have, so if they seem uncertain or won’t give you straight answers, that’s probably a mover to avoid,” says Michael Keaton, senior director of communications for the American Moving & Storage Association. “Ask them about the moving process so you understand what they will be doing and when they will be doing it, from start to finish.”

Weitekamp recommends asking the following questions before selecting a moving company:

  • Are you licensed and insured?
  • Are you a certified professional mover who meets the standards of the American Moving & Storage Association?
  • Are you a member of your state’s moving association?
  • What price are you willing to put in writing as a “not to exceed” threshold price?
  • What are the dates you can commit to for pickup and delivery for my move?
  • Can you give me some references of people you have recently moved?
  • How are your crews selected?
  • What actions do you take to ensure that the people who come into my home are skilled, professional, and safe?

4. Falling for fakes

The internet is awesome. right? Whether you’re looking for comprehensive info on the best mortgage rates, or you simply must know immediately why your dog’s paws smell like corn chips, the web is there for you.

And it’s there for you to find your next mover, too. But we shouldn’t have to tell you that online info can lead you astray. Double check your info by getting moving company referrals from an industry trade association or use a site that verifies and vets moving companies.

Another word of caution: Beware of blindly trusting that the company you’re hiring is who it says it is: “Some disreputable movers try to lure customers in by using names that are similar to reputable companies,” Weitekamp says. “Check the reputable company’s website to make sure the local agent is affiliated with the brand name it is claiming.”

Max Lowy, president of New Jersey–based Lowy’s Moving Service, also warns consumers to carefully consider low estimates from a company that hasn’t been in business long—even if its Yelp profile seems solid.

“Responsible moving companies will provide in-home estimates and explain why the pricing is the way it is,” Lowy says.

According to the American Moving & Storage Association, the lack of a physical, local address is a telltale sign of a fake mover. Here are other red flags:

  • No federal motor carrier number, which shows the mover is registered with the federal government for a state-to-state move
  • Movers who refuses to visit your home to provide a written estimate for an interstate move
  • Companies that use unmarked, generic trucks
  • Movers who seem uncertain or unresponsive, especially when asked about their claims process if something gets damaged or lost

5. Agreeing to pay a deposit or pay in cash

If you’re moving across town, this one’s a huge red flag.

“Typically you should not be required to pay a deposit to have your items moved,” Weitekamp says. “Most companies request payment at the time of delivery.”

If you’re moving out of state, your moving company could request a deposit. But make sure it’s reasonable.

“A reasonable down payment should be in the hundreds of dollars toward your state-to-state move, rarely exceeding 20%,” Keaton says.

Similarly, avoid movers that demand cash instead of allowing payment by credit card.

6. Not doing proper legwork when you move out of state

If you’re moving out of state, make sure to check this government database to find out if the mover you selected is actually licensed for interstate moves by the Federal Motor Carrier Safety Administration.

Request a copy of “Your Rights and Responsibilities When You Move,” a brochure created by the Federal Highway Administration that outlines consumers’ rights. Federal law requires movers to provide this to consumers before moving their belongings over state lines.

The takeaway? Get several estimates, do your research, and remember that so often in life, you get what you pay for.


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6 Surprising Revelations You’ll Have Purging Your Stuff Before You Move

(Originally written by Adriana Velez on

I moved in with my boyfriend this past summer. Before you imagine some cute recent college grad in her first adult relationship, no. I’m a divorced mom who had lived in the same Brooklyn apartment for nearly 20 years. And you can imagine what that means: I had some baggage. Literally!

I’m talking tons of stuff I had accumulated over the years, somehow crammed into my tiny space. And since my beau and I were merging assets into one apartment with minimal storage, that meant I’d have to let go of a lot of my possessions if I had any hope of making this cohabitation situation work.

All told, by the time I moved, I got rid of 50 garbage bags’ worth of stuff (some of it given away, much of it trashed). And then, once I moved in, I threw out 15 or so more bags of junk.

Who knew so much junk could fit into a 550-square-foot apartment? By letting go of it, I learned a whole lot about myself. Here are a few surprises I encountered that could be in store for anyone embarking on a pre-move purge.

Realization No. 1: You have way more stuff than you realize

Here are a few doozies that surprised me:

  • Copper polish for the zero copper objects in my apartment
  • A 10-year-old Egyptian spice I was waiting for inspiration to use
  • Attachments for a vacuum cleaner I no longer owned
  • A neti pot I was too chicken to use
  • Cans of leftover paint so old the paint had hardened
  • Fluorescent tape from the time my son had a “Tron”-themed birthday party and we put it on our black clothes to look like characters from the movie
Ooh, so Tron!
Ooh, so Tron!

Before this point, I always prided myself on being vigilant against collecting stuff. I had no freaking idea.

Realization No. 2: Very little stuff you have is worth moving

Moving actually offers the perfect motivation to get rid of things by prioritizing what really matters. Take, for instance, my vast collection of cookie cutters. I had to face the fact that I actually despise baking cookies. I don’t even like eating them. I had all those cookie cutters only because I thought they were something a good parent keeps around. But guess what? I never used them, and my kid seems to be OK.

When you put something in a cardboard moving box, you’re saying, I value this thing enough to take it with me to a new place. And as it turns out, not a lot of stuff is worth the haul.

Realization No. 3: Purging is like therapy

Looking at some of the discards made me want to call a therapist. Like the ambitious knitting project I never finished, like so many other big projects. And the expired medicine for my ex-husband’s digestive ailments, which he didn’t bother to take with him—apparently it was our marriage that was making him sick. Actually, throwing out these items was therapy in itself.

Realization No. 4: You can focus on what you love

Look, I’m not anti-stuff. I’m just anti-crap-you-don’t-really-care-about. Find the objects that spark joy (yes, I’m paraphrasing Marie Kondo because she’s right), and trash the rest so it doesn’t get in the way of the joyful stuff.

For instance, I got rid of all my barware except for three Waterford crystal goblets. All those mismatched wine glasses, chipped martini glasses, cordial glasses, and brandy snifters for the brandy I never remember to buy? Gone. And now I can feel so very fancy drinking out of my fine crystal that’s within easy reach.

Realization No. 5: You can always replace things later—or not

I know it seems wasteful to trash something, only to eventually buy it again. But it’s surprising how many tossed things I haven’t replaced, months later. As a writer, of course I collected books. But how many of those books did I love so very much that: a) I knew I’d read them again and b) I knew I’d need to read them so urgently that I couldn’t even wait to check them out of the library? Or buy a new copy? Wow, not very many at all.

Realization No. 6: You will toss family heirlooms by mistake

OK, there is a risk that you will throw out something you can’t replace, like the Holly Hobbie Christmas stocking my mother sewed for me when I was a child. I’m also still missing my Social Security card. This will almost definitely happen no matter how careful you are.

But if that risk is keeping you from cleaning out your closets, just remember: Life will go on. Yeah, you’ll miss the thing. But you’ll find other ways to be happy.

So go on, enjoy throwing away your life. Make “toss it” the default whenever you’re stuck. Enjoy the reckless thrill of letting go and starting over—and don’t be surprised when it all starts building up again.

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7 Unexpected (but Worthwhile) Headaches of Becoming a Homeowner

There’s a reason they call homeownership the American dream. We save and save just for the hope of one day having a place to really, truly call our own—a space to decorate how we want, to grow our family, and to create memories.

But for all its upsides, homeownership comes with its fair share of headaches. Sure, you’re probably aware that taking care of your yard and making those mortgage payments just comes with the territory. But there are a few other unexpected occurrences and oddities that can crop up.

We don’t want to deter you from the American dream; we just want to keep it an American reality. So brace for these bumps in the road when signing on the dotted line.

1. Changing lightbulbs is no joke

There are plenty of jokes about how many imbeciles it takes to change a lightbulb. But the true punchline is this: Sometimes it really does take more than one person.

We have crazy-high ceilings—one electrician told me he’d have to build a scaffolding and get a permit from the city to change a bulb. Thankfully, we found someone with a really tall ladder to do it (no permit required). Pro tip: Get long-lasting LED bulbs.

Even if lightbulbs aren’t the biggest challenge in your home, rest assured you’ll be saddled with some simple-sounding piddly annoyance that will cause you to bang your head against the nearest wall.

Be careful not to bang too hard—you own that wall now.

2. Pinterest is full of lies

Pinterest makes it look so easy to create beautiful works of art and decor on the cheap. But when you actually try that textured painting/fireplace remodeling job/cabinetry update, you end up with a huge Pinterest #FAIL.

I once tried to transform a huge bulletin board into a fun, fancy creation for my daughter’s bedroom wall; but I learned the hard way that washi tape is not as easy to use as it looks. The sticky, lopsided mess looked nothing like the Pinterest picture. And the aftereffect is that my house remains largely undecorated because, let’s be honest, hiring people to do this stuff for you is expensive.

3. Your lease is never up

The great thing about owning a home is that you never have to worry about rent increases or your landlord making you move out when the lease is up. The not-so-great thing about owning a home? Your lease is never up.

Renting provides flexibility. Move for your dream job in Morocco? Why not? The perfect house in your now-trendy hometown is finally on the market? Go ahead! Even if you’re in the middle of your lease, it usually won’t bankrupt you to break it.

Sure, as a homeowner, you can make these kinds of moves on a whim—but it could cost you big-time. Don’t count on being able to sell your home in a hurry. At the very least, don’t expect to sell without being prepared to take a loss.

4. You’re in for the long haul, and so are your neighbors

Maybe their dog repeatedly uses your front lawn as a toilet. Or perhaps you’re discovering that those neighbors who were so friendly when you moved in love to have loud parties every weekend. But just like you made a commitment to settle down, so did your neighbors. You can’t just knock on the ceiling with a broom and then hope you don’t see them in the elevator until one of you moves out. Chances are good that you’ll be forced to encounter them on multiple occasions, and sometimes that means learning new methods of conflict resolution. (I personally hold my breath with every moving truck that passes my house.)

5. You’re the landlord now

In case it hasn’t hit you yet: When trouble arises, you’re on the hook, so now’s the time for a swift education on potential home maintenance problems.

I can’t tell you how many vacations we’ve returned from, totally relaxed, only to realize the air conditioner had quit working, the water upstairs was leaking through the ceiling, or somehow the dishwasher had pooped out even though no one was using it.

Unfathomably these things always seem to happen just in time to kill our vacation buzz; it makes me nostalgic for my carefree days as a renter, when someone else would sort things out and pick up the bill.

6. You’ll spend your free time (and your money) at home improvement stores

Remember those after-work happy hours and naps on the weekends? Yeah, well, those activities will now be replaced with trips to the home improvement store. (Note to home improvement stores: Offering cocktails would be nice.)

From replacing air filters to stocking up on weed killer, drain cleaner, and specialty lightbulbs, it sometimes feels like my husband and I spend more time in our local Home Depot than we do in our home.

Before we became homeowners, we had no idea just how many things need replacing just to keep everything working. Case in point: Air filters. Do you have any idea how often you have to replace those things to keep your heater and air conditioner running well? It varies, but most manufacturers say every 30 to 60 days. That’s a lot of air filters.

7. The bills never end

Speaking of things you need to keep your house running, you need money—lots of it. When you’re renting, your only bills are typically cable, electricity, telephone/internet, and water. When you own a home, the bills just keep coming. Currently, in addition to the aforementioned bills, we pay for utilities (water, trash, sewer, and other city services), lawn service, lawn pest service (which somehow isn’t part of regular lawn service), an inside pest service, propane, pool service (a must when you live in Florida), homeowners association fees, and a few others I’m forgetting.

The point is this: When you’re calculating what you can afford, there is much more to consider than just the cost of the mortgage. Before you buy, make a realistic budget that leaves a cushion for emergencies. That way homeownership can continue being the dream—instead of inducing nightmares.


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5 Tips Real Estate Investors Need to Know to Find Good Deals

With real estate prices reaching ever-higher highs in large swaths of the country, the availability of deeply discounted properties is drying up. And that means it’s getting tougher for real estate investors and home flippers to find great deals worthy of their time and cash.

“There are fewer foreclosures to buy, but there’s more interest in buying foreclosures,” says Daren Blomquist, senior vice president at ATTOM Data Solutions, a real estate data firm. “Competition, even at the foreclosure auction, is pushing prices up.”

Bank-owned property sales, foreclosure auctions, and short sales still made up 16.9% of single-family home and condo sales in the first quarter of 2017, according to ATTOM. But that’s down from 20.3% of sales a year ago.

“Back in 2007, you were getting 20% off the actual value” on bank-owned property sales, Leland DiMeco, owner and principal broker at Boston Green Realty, told ATTOM’s Housing News Report. “Now you have them selling for 5% off, if that.”

So how can established and aspiring real estate investors and home flippers find a real deal?

Tip No. 1: Be proactive and look for off-market properties

Some landlords prefer to quietly shop around their properties to investors instead of listing them publicly. This way, the owners don’t upset any tenants currently living there.

“There is quite a bit of the pie that does get moved around, legitimately, but just off-market,” DiMeco told ATTOM.

So would-be investors shouldn’t wait for property owners to find them—they should find these folks themselves.

“If you like a neighborhood, you can go knock on doors,” Blomquist says. There might be “homeowners who may want to sell and don’t even know they want to sell yet.”

Tip No. 2: Act fast and pay with cash

There are still deals to be had—if you act quickly, says real estate investor Brandon Turner, author of “The Book on Investing in Real Estate With No (and Low) Money Down” and “The Book on Rental Property Investing.” He owns 52 rental units in 18 properties and has flipped about a dozen homes in Grays Harbor County in Washington.

“You have to work faster than everyone else,” he says. “I try to make an offer within 24 hours of a new listing coming on the market—the same day, if possible.”

Paying all cash can also sweeten the deal for sellers who might have multiple offers, he says.

Tip No. 3: Don’t ignore potential tear-downs

Real estate investors might not initially see the value of buying an overpriced, small, or run-down home within the city limits. But many of these homes in desirable locations can be sold to a developer to be torn down. Then a multifamily building or larger home can go up if the zoning permits it. And that can translate into some serious moolah.

It requires some vision and a bit of a leap of faith. With a potential tear-down, “it may not be a good deal to buy it as a single-family home. But if you can buy it for what it could be, it can be an excellent way to find value and deals,” Turner says. However, this approach is not without risks and obstacles.

“If you’re going to build a new house, it takes a good while to get all the permits,” he adds. “The danger is if the market begins to decline, you might be unable to sell it.”

Tip No. 4: Seek out nasty, smelly homes

Investors shouldn’t shy away from hardcore fixer-uppers and “nasty” homes, says Turner. That’s because there is not as much competition for these potential diamonds in the rough. Many lenders won’t issue loans on these properties if they’re in really bad shape.

“The stinkier the house, the better,” Turner says. “Smells are easy to fix. A good coating of oil-based primer, new carpet, and cleaning will take care of almost any smell.”

He typically looks for the “nastiest house in the nicest neighborhood,” he says. Even homes in need of serious TLC can be profitable if they’re in the right location.

“You can’t fix a neighborhood, but you can fix the house,” he says.

Tip No. 5: Look in another city or state

Many would-be property investors living in pricey parts of the country would love to become landlords—but can’t afford to do so in their own cities. So they can consider buying in lower-priced markets such as the Midwest.

“Look in other geographies that aren’t in your backyard,” Blomquist says. Focus on places that are growing “that still have a lot of lower-priced inventory available.”

But they should make sure to do their homework first to make sure they understand the neighborhood they’re buying in and who their potential tenants or buyers would be. This includes how much they can realistically charge.

Landlords might need to hire property management services if they can’t afford to get there quickly if something breaks. And that eats into profits.


Remember, becoming a real estate investor is still risky

Despite the stinky homes, investing in real estate might seem like a glamorous way to make a little extra cash—just look at all of those home flippers on HGTV! But in reality, it’s not risk-free.

Landlords sometimes have tenants who trash homes or don’t pay the rent on time. Flippers might encounter permitting problems or find costly structural issues in homes that cost quite a bit more than expected.

“We’re in a booming housing market. Everyone’s confident if they buy a piece of real estate it’s going to go up in value,” says Blomquist. “That’s true for the long term.

“This housing boom is on a lot more solid foundation than what we saw 10 years ago,” he says. “But you have to be very cautious because, in the short-term, we have seen … that prices sometimes do go down.”


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How to Make a Backup Offer on a Sale-Pending Home

If you think a home marked “sale pending” is off-limits, think again. Yes, this label means that the buyer and seller have negotiated an accepted purchase contract, but things happen—and sales can fall through. For that reason, there’s no harm in making a backup offer.

“If a buyer is in love with a particular home that happens to be pending, why not give it a shot?” asks John Lazenby, president of the Orlando Regional Realtor® Association.

So don’t let go of that dream house just yet. Here’s what you need to know on making a backup offer If the original deal falls through and you’re next in line—you could end up nabbing the home you were pining for all along. Sweet!

Why would a pending home sale fall through?

Even after all the work that a buyer and seller went through to create the contract, sales can still fall through.

“The contract often contains contingencies that can kill a transaction if they’re not met,” says Lazenby. Common examples are contingencies related to the following:

  • Inspections: A sagging foundation, leaking roof, or other big-ticket repair items could kill the deal.
  • Appraisal: If a home is appraised under the sale price, the financing can fall through if the buyer isn’t able to make up the difference.
  • Buyer’s loan approval: If a potential buyer is only pre-qualified, rather than pre-approved, the financing might not materialize.

Another common reason is a bit simpler: buyer’s remorse. Maybe an expected promotion didn’t come through or the buyer decided she didn’t like the open-plan kitchen after all. Truth be told, there are a million reasons buyers get cold feet and change their minds.

Reasons to make a backup offer

Some potential buyers are in a better position than others to wait it out. If you relate to one of these conditions, making a backup offer is a good idea:

  • You’re not under a time constraint—such as the desire to be settled before the start of the school year. “If a buyer is in a hurry, it might not be feasible to wait a month or longer to see if the initial contract falls through,” Lazenby points out.
  • Inventory is particularly tight, and there’s nothing else in your price range that’s tempting. Sometimes it’s best to wait and see on the house you love, rather than jump on something else that isn’t quite right.
  • The listing agent is able to give you some intel about the house that leads you to believe the other buyers might get cold feet or that there are contingencies.
  • It’s a short-sale transaction, which Lazenby says is much more likely to collapse than a regular transaction. Often the bank, or whoever holds the mortgage, will find the price too low and will demand the seller put it back on the market to achieve a fair price.

How to make a winning backup offer

If you and your agent decide to put together a backup offer, here are a few touches that can help turn the tables in your favor:

  • Money talks. Present a clean offer, complete with mortgage pre-approval and proof of funds. If you are able to, offer over asking price.
  • Be flexible. Are you willing to give them extra time to enjoy the holidays in their home, or forgo minor repairs that others might insist on? Some sellers might appreciate benefits other than cold, hard cash.
  • Write a letter. You never know when a personal touch might resonate with the sellers. Tell them how much you’re looking forward to raising a family in their family home or entertaining in their amazing dining room.
  • Stay visible. You want the sellers’ agent to know you’re ready to move when they are. Have your agent be in frequent touch to ensure you are on their radar should anything change.

The bottom line: Never say never when a sale is pending. With a little determination and luck, that house could be yours.


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How Much Are Mortgage Fees? The Costs That Come With Your Loan

When shopping for a home, it seems like there’s something to pay for at every step of the way. To get your mortgage approved—thereby allowing you to actually buy your house—you’ll have to pay mortgage fees. The most common mortgage fees also fall under the umbrella of closing costs, those expenses you pay when you close on your house that help facilitate the sale (i.e., the appraisal fee, the title search, and the processing fee).

Although it’s difficult to put an exact figure on the mortgage fees (they vary from state to state) you can expect to pay, there are some costs that almost every mortgage has in common. We spoke with Amy Bailey Oehler of PrimeLending about what they are and how much money a home buyer should plan on paying for the loan.

Mortgage fees you’re likely to pay

  • Appraisal ($450 to $650): An appraisal by a licensed appraiser will almost always be required by the lender. The price varies depending on the size of the property and the type of loan you’re getting. “A lot of lenders will require payment for the appraisal upfront,” says Oehler. “The appraisal fee goes directly to the appraiser. If the loan doesn’t close, but the appraisal was completed, then the appraisal fee is nonrefundable.”
  • Closing fee ($300 to $600): A representative from the title company will come to your closing to supervise the transfer of title, and you’ll have to pay for the service.
  • Credit report fee ($25 to $50): This is the fee to pull your credit report.
  • Inspection ($450 to $500): The inspection isn’t a requirement for the loan, but it is highly, highly recommended. This is another cost that is paid before you reach the closing table. Generally, you can negotiate either fixes, concessions, or a drop in sales price based on any problems the inspector finds.
  • Lender’s title insurance (usually 0.5% of the purchase price): This protects your lender if something was missed in the title search. The cost depends on the size of the policy and is set by the state.
  • Survey ($350 to $500): Most states require a survey of your property before you can get a loan. If a survey doesn’t already exist that can be used, you’ll have to pay someone to do it.
  • Title search ($300 to $600): Your lender will do a search to ensure there are no liens on the property or anything that could prevent you from purchasing it. Sometimes this will be bundled with other title fees in your closing document.

Mortgage fees you might have to pay

  • Application fee ($100): Some lenders charge a small fee when you submit your application. This is also sometimes bundled with the origination costs.
  • Attorney fee ($150 to $500): In some states, you bring your own attorney to the closing table; in other states, you don’t. If not, the lender might need to consult an attorney to look at closing documents or contracts.
  • Flood certification ($5 to $10): This tells the lender if the home is in a flood zone.
  • Homeowner’s title insurance ($1,000 on average): You aren’t required to take out a title insurance policy for yourself, but it’s highly recommended. If any liens were missed during the title search, you will be on the hook for any costs to clear them unless you have this insurance.
  • Origination or processing fee ($300 to $1,500): This fee covers the cost to prepare your mortgage. Sometimes you won’t be charged this fee at all. Make sure to read your Loan Estimate and Final Closing Disclosure carefully to see if/where you are being charged.
  • Points (1% of your total mortgage): Points are lender fees paid to reduce your interest rate. These are different from “origination points,” which are just another way of presenting mortgage origination fees.
  • Underwriting fee ($400 to $600): This fee is paid to your lender to cover the cost of researching whether or not to approve you for the loan. Some lenders bundle together the underwriting with origination fees or processing fees.
  • Wire or courier fees ($30 to $100): If documents need to be sent overnight or money needs to be wired, you’ll pay these fees at closing.

How to reduce mortgage fees

As with any deal, the best way to cut mortgage costs is to shop around for the best deal. Some lenders charge more for their services, and if the overall rate isn’t any better, look for someone with lower fees.

Also, make sure you understand every fee you’re being charged. There might be some optional fees you can choose to waive—just don’t be penny-wise and pound-foolish. Saving $500 on an inspection could cost you big in repairs later. If you have an FHA loan, you can sometimes use your loan to pay for closing costs, but be aware that it could increase your interest rate.

Another potential way to save is through bank loyalty programs. Sometimes if you get a loan from the bank you have other accounts with you can reduce your origination costs.

If you are a veteran, you can qualify for a Veterans Affairs loan, which requires no down payment and has lower closing costs overall.

To save cash, you can always try to negotiate with the seller to pay some of your closing costs. Depending on how motivated the sellers are to close on their property, they might be willing to pay title fees, points, and even transfer taxes.


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What Are Property Disclosure Statements? Info Buyers Need to Know

No matter how great a home looks at first glance, a host of problems could be hiding right under that fresh coat of paint—which is why buyers will want to scrutinize certain paperwork they’ll receive called property disclosure statements.

Property disclosure statements essentially outline any flaws that the home sellers (and their real estate agents) are aware of that could negatively affect the home’s value. These statements are required by law in most areas of the country so buyers can know a property’s good and  bad points before they close the deal. Here’s what all buyers need to know about real estate disclosures.

When do buyers receive property disclosure statements?

While it varies by area, most buyers will receive property disclosure statements after their offer has been accepted, says Atlanta Realtor® Bill Golden. That way, buyers can review this paperwork at about the same time that they typically hire a home inspector to check the property for any defects. In fact, disclosure statements can help point your inspector toward areas of a home you’d like to home in on, so try to read your disclosure statements before scheduling the inspection.

In certain areas, sellers might even hand buyers disclosure statements before an offer is made. But no matter what, it should be early enough to give buyers time to do their due diligence and spot problems that could make them reconsider whether this home is right for them.

What types of flaws must be disclosed?

Sellers are required to complete a variety of disclosure documents, which are often in the form of a government-issued checklist where they mark whether their home has (or once had) a variety of problems such as the following:

  • Windows that don’t close or doors that stick
  • Faulty foundation or leaky roof
  • Problems with appliances or home systems like the HVAC
  • Repairs made on any of the above as well as insurance claims
  • Renovations completed without a permit
  • Pest or mold infestations
  • Environmental hazards in the area (e.g., floods and wildfires)

The federal government requires certain disclosures anywhere in the U.S., like the existence of lead-based paint, asbestos, or other clear health and safety risks. However, states and counties also have their own particular laws on which issues must be disclosed. For instance, some states require sellers to disclose nearby sexual offenders, while others do not. Some require a death on the property to be disclosed, especially if it was a murder, while others leave you to do that kind of sleuthing yourself.

If buyers (and their real estate agent) read a disclosure document and see nothing to worry about, they sign off on it before moving one step closer to sealing the deal. If, on the other hand, buyers spot something worrisome, it’s in their interests to delve further.

What to do if a disclosure reveals something bad

If you spot something on a disclosure statement that you don’t understand or that raises concerns, have your real estate agent bring it up with the sellers (or their listing agent). In some cases, they might have an explanation that puts you at ease (i.e., “we had bedbugs back in 2012 but hired an exterminator and have been free and clear ever since”). Or, if the issue makes you seriously question whether you want to move forward, this could be an opportunity to renegotiate the sales price to compensate for the added risk you’re taking on buying this home.

At worst, you can always back out of the deal without penalty—meaning you won’t have to forfeit your earnest money deposit. And if you happen to find a problem that should have been disclosed but wasn’t, that’s all the more reason to consider carefully whether you want to move forward. After all, if sellers covered one thing up, what else could they be hiding?

However, keep in mind that the sellers are required to reveal only all known problems. That’s key. Sellers aren’t typically held responsible for problems they aren’t aware of. And that’s just one more reason why buyers absolutely should get a home inspection to root out any potential problems themselves.

But all in all, smart sellers inform buyers of everything they need to know upfront. While property disclosures exist mainly to protect the buyer from getting a lemon, this paperwork protects the seller, too.

“If sellers disclose everything they know about the house, a buyer can’t come back to them later saying they weren’t told about an issue,” says Golden.

Property disclosure statements save everyone time, hassle, and expense by preventing deals from falling apart—and that benefits both buyers and sellers.


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How to Flip a House: 7 Signs You’ll Rake in Huge Profits

It seems like just about everyone these days fantasizes about how to flip a house. The reality? Doing it successfully largely hinges on picking the right place at the right time—which is why veteran flippers keep a mental checklist to help steer them toward homes that are primed to gush cash.

Curious about those signs that indicate all systems go? Let’s check out those qualities deemed by real estate investors as signs a house flip will pay off big-time.

Sign No. 1: It’s in a neighborhood where homes sell fast

One of the first clues that a house is flip-worthy is that it’s in an area where homes sell quickly, says Larry Friedman of SDF Capital in New York and Connecticut. After all, in this game time is money—every extra month you own the house means you’re on the hook for more mortgage payments and maintenance costs. Fast-moving markets generally mean these overheads won’t last long. data show that, on a national level, homes remain on the market for 62 days on average. Yet in a blistering area like San Francisco, homes typically sell in 25 days; in slow markets like Albany, NY, it’ll take 81 days. So be sure to check how long it will take in your own neighborhood by checking

Sign No. 2: The house meets the 70% rule

For a flip to be worth your time, effort, and money, you should make between 10% to 30% return on your investment. To determine your potential return, see if the flip meets the 70% rule. Can the house be bought for 70% of what it will be worth once fixed up, minus any needed repairs, closing costs, and real estate agent fees?

For example, if you can buy a house for $110,000 and fix it up for $30,000, you’ll want to sell it for around $200,000 in order for it to be worth your while, says Mark Ferguson, a Realtor and creator of

To find what a home will be worth fixed up, check the prices of similar houses in the neighborhood (more on that next).

Sign No. 3: You can price the house right

To get a ballpark figure for how much you can sell a house for once it’s fixed up, one safe rule of thumb is to check the median home price for that market. (You can find this information by entering a home’s address or ZIP code at In Parma Heights, OH, the median sales price is $117,000, while at the other end of the range in Manhattan, NY, buyers expect to pay $1 million. Of course, this presumes your home is typical in terms of size and number of rooms.

Sign No. 4: The property has more than one bedroom

Don’t buy a one-bedroom house to flip, because most home buyers are looking for two bedrooms and more. Anything smaller will minimize the demand at resale. Another flip-worthy must is a functional floor plan. Translation: You shouldn’t have to go through a bedroom to get to the kitchen.

Sign No. 5: The needed repairs are mostly cosmetic

The physical condition of the home should be fair and correctable without draining your bank account—like a kitchen or bathroom renovation or installing new flooring. Repairs that should give you pause include foundation and structural issues. Tackling these two problems can destroy a reno budget with overages and stretch the time frame of the flip.

“The home needs to be in good shape to begin with, unless you are planning a very large gut and addition, which is unlikely in most flips,” says Realtor Misty Weaver at Keller Williams Realty, in Winchester, VA.

Sign No. 6: Understand what scares home buyers

Most home buyers touring an open house can deal with a lime-colored wall they need to repaint or one appliance that dates to the Reagan administration. What many buyers can’t handle, though, are intimidating and pricey projects like replacing an old furnace (which will cost around $4,000), putting on a new roof ($3,000 to $10,000), electrical upgrades ($1,500 and up), or plumbing issues ($1,000 to $10,000). Not only do these issues spook home buyers, they also could make the home hard to finance with lender money.

Last but not least, a home shouldn’t have any “crazy characteristics like a railroad in the backyard, a very busy road out front, or other problems that can’t be changed,” says Ferguson.

Sign No. 7: The neighborhood itself doesn’t need flipping

People don’t just live in a house, they live in the surrounding area, too. A potential flip should be in a good neighborhood with access to transportation and amenities like parks. Perhaps the biggest indicator of a flip-worthy home is the quality of the schools.

“A large segment of the market buys to be in a good school district,” says Susan Naftulin, owner and president of Rehab Financial Group, who makes loans to house flippers. Even if you don’t have kids, most buyers see good schools as a huge plus.


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