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HGTV has had several ?house flipping? shows. You know, you buy a house, fix it up and then sell it and make money.? To be fair, I?ve seen some episodes of some shows where the people who buy the home go way over budget and time and are lucky to break even.? But this week, seminars are being announced by one of the hosts of one of these shows.? Naturally he is promoting the seminar and then a 3 day course (which you pay for) to learn even more about how to do this. WEWS?s website did an article with warnings from Cleveland City Councilman Tony Brancateli ?.one thing he says is it?s a pyramid scheme.
I haven?t attended a seminar, nor have a bought and studied the course, so I can?t speak to whether or not it?s a scheme.? What I can say is, don?t jump into anything without doing a lot of research.
I just had a client who purchased a home for less than $30k.? It needs a roof, electrical and gas work, and lots of TLC.? But at that price and for the size of the home, it makes a nice place to live.? Gives him more space than he currently has.? And once he makes the repairs, yes, the? maket value of his home will be higher than what he paid for it, which was almost nothing.? Now, I can say this, because I know what repairs he?s making and what he is not going to do.? He?s not going to spend 40k on a new kitchen, for example.?
The Councilman mentions back taxes and liens that might be on a house which can add to what you pay at the closing when you purchase.? This can be true.? But you can also rely on your Realtor? to get some title lien searches done before you buy a home. In the case of the above client, no liens, no back taxes.? All clear.? We call all of this doing your due diligence when purchasing a home.? (as a matter of fact, if you buy a home that is NOT distressed, your title company will search and you will know if there are liens and back taxes.? It behooves you to know what you are getting into).
Another way to make money is to buy a home? after you have done all the research I mention, fix it up and rent it out.? Rental market is all about low supply right now.? So you could buy a home for 25k, fix it up for no more than another 20k, still have a very, very low monthly payment, and then rent it out for twice that monthly payment.? But again, you have to do your research.
You notice I mention fixing up a home after you buy it.? It?s almost impossible to expect to buy a home, just paint the walls and clean and then either move in or rent it out.? Every now and then someone gets lucky this way, but usually there are things to fix.? And sometimes we all know the copper pipes have been stolen.? So if you don?t have a capital outlay of money to put into the house, and you can?t qualify for a renovation loan, it probably is not a good idea.
I also don?t think you really need to pay to take a course.? But attending a free seminar can?t hurt (I heard the radio ad, can?t remember if these 11 seminars sponsored by the HGTV ?guy?? are free).? It also can?t hurt to actually work with a Realtor? who can help you wade through the homes that are available and see what might be the best course of action.
I have a lot of respect for the gentleman who I reference above, who purchased the house for less than 30k.? He already lives in the neighborhood.? He wants the street he lives on to look it?s best and he?s always liked the architecture of the home he just bought.? So his old home (which he owns) will become a rental for an employee at his business and he will now have more space to live in.
There ARE good reasons to do this..? Just be cautious, especially with some TV guy dangling the hope of riches in our faces
3C
I can?t
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