Buying investment property takes a serious amount of working knowledge, hands-on experience and an understanding of return on investment.
I have seen many in the past thirty eight years in the business all the way through today in 2019, as many individuals just jumped into this real estate market and became investors overnight and immediately bought a property without one iota of proper research, or doing sufficient homework and just willy-nilly began the process of renovating or remodeling without all the proper legal permits, adding things, such as basement bathrooms w/showers or bathtubs without proper egress out of the basement.
If you are doing a finished basement, you must have egress out by either a separate entrance (besides the regular basement staircase) or by a pop-out window with a metal ladder leading into the yard.
I have also seen illegal installations and improper wiring to circuit breakers, not to code. I have also seen homes built a bit higher than the zoning in the area without any thought of even applying for a possible variance, as fences that are six-feet high in a four=foot zoned area.
Understanding that certain breeds of dogs could be a major concern of potentially biting someone and subjecting themselves to lawsuits. This would be a very legitimate reason for applying for a variance for a taller fence.
However, it is all up to your local jurisdiction and most important the attorney that you hire to go to court with you or for you, who should be a top-notch specialist in dealing with the zoning code arena.
An example would be to not hire a zoning attorney for him or her to handle an intellectual property law case. Everyone has their niche specialty and it behooves you to always interview several professionals within that field of their expertise to have the right fit and hire the most experienced professional for the job that you want done!
Never hire a jack of all trades” unless it is a well-rounded contractor who has 4+ star online reviews and a proven track record in all his fields of expertise! One must really sharpen their pencil when bidding on a home to fix and flip or any other type of property to ascertain and determine, “where’s the profit.”
One also should hire a broker well versed in completing a broker price opinion and comparative market analysis. This will provide the investor the necessary information for each property to be considered, so that the purchaser or investor, has a sufficient amount of data to know what price to offer on them.
Traveling around those specific neighborhoods to see the homes that sold and what they look like from the outside as well as also determining who else is doing fixes and flips. Most crucial in your decision making is to determine if there are any new homes that were constructed or are planning to be constructed.
Go down to the local building department and see how many new construction permits had been or are in the process of being filed. Lately, I myself have been traveling around specific towns to see what if any activity is going on and I personally use the same variables to make my own decisions to fix and flip.
It is very critical to carefully be aware and watch your labor costs to fix a home. They could be upwards of 75 percent of your total outlay and be your greatest expense factor, while materials about 25 percent; but it all depends on what you estimate that you need to do to make the property saleable.
Those figures can vary, depending on how much you are remunerating for your labor and at what price you are purchasing your materials and the cost of money! Thinking and exploring the possibilities before you “pull the trigger” and putting down your hard earn dollars or if you are borrowing “hard money” (much higher interest rates than normal borrowing, which is about 5 percent today), will provide you a more solid foundation in making sure you earn your profit at the end of the sale.
Lastly, having a dependable crew that you pay properly and have a safe, clean and enjoyable environment will go a long way in putting current and continued future profits in your pocket.
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 Great Neck. He has earned designations as a Graduate of the Realtor Institute and a Certified International Property Specialist.
He can be reached by email, at:Phil@TurnKeyRealEstate.Com, or by cell: (516) 647-4289.