If you’re still using Facebook, you know that there’s a group for everything from different breeds of dogs and cats, to silly games that lead to data mining of your information for commercial or nefarious purposes, to groups that offer advice on specific things ask medical questions. to all real estate.
One of the Facebook groups I participate in allows users to share home improvement tips. It’s a bit like HGTV or the DIY Network, with a dose of reality.
Simple topics can include improving curb appeal, choosing paint colors, installing floors, replacing an electrical fixture, or changing a toilet.
Sometimes contractors come up with more complicated work and even give an idea of how long a project might take and how much it might cost in a certain area of the country.
It never ceases to amaze me how little people know about how their home works. I blame the seller’s market for much of this in recent years, where inspections are either brief or non-existent.
An inspector used to spend several hours with a buyer, going through the condition and operation of a home’s systems and fixtures, preparing a written report and even including a folder detailing how to repair simple items or when to do general maintenance .
The advent of the “walk and talk” inspection, performed before a bid is submitted, shortened this process. A buyer would have to take his own notes while the inspector spoke and pointed out things. Often the buyer would walk away with information written in cryptic shorthand that made no sense a few weeks later.
Some people still picture themselves as home fixers, intent on making a massive profit by doing a few select renovations and reselling a home. My Facebook group often brings out those who have the desire but don’t have the skills or funding.
A person recently posted photos of a home they were planning to renovate for profit. His first question was whether he could remove all of the mold himself or whether he should hire a professional mold remediation company.
I looked at the photos and immediately thought of Tyvec suits, respirators, and those movies where CDC warns of a toxic environment that needs to be contained and the toxins eradicated—not my idea of a DIY project.
Another unrealistic aspect of this renovation was its cost estimate—$100,000 for mold remediation, a new roof, central air conditioning and heating, and of course new electrical, plumbing, drywall, fixtures, cabinets, and appliances. Even with the home priced at $175,000 and potentially worth $400,000 after renovation, the professional fins told him he lived in La-La-Land.
Amateur fins in the DMV have seen their opportunities dry up over the last five years as even distressed properties that have fallen into disrepair can be sold for half a million dollars or more. Even the pros are knocking on doors, sending postcards to desired neighborhoods, and calling or texting owners and real estate agents to look for properties to fix and flip.
However, if you’re inclined to try rehab, even for your own home, here are my top five things to consider before diving in.
• Find out what permits you need and the process and timeline for obtaining them, or you may face the dreaded orange work freeze pinned to the home window.
• Find an architect and/or engineer to help you plan the layout. Keep in mind that not every wall can fall down to create an open concept floor plan without supporting it in some other proven way.
• Learn more about “hard money”. Unlike traditional home loans that are based on income, assets and credit, these high-interest, short-term loans are based on the difference between what you pay for the home (“actual value”) and its “as-renovated value”. estimated at resale.
• Consult a real estate agent about popular features and finishes so you can sell the home quickly and get the highest price. Buy these items locally to avoid delays in the supply chain.
• Budget for unexpected cost overruns of 10-15%. Even with an interest-free loan with no payments due until resale, you still owe taxes and insurance and make regular payments for materials and labor. Don’t forget to add commissions and closing fees on buying and selling.
Your first project may not bring the expected profit, but it will give you a sense of whether it’s worth trying again or leaving the renovation to the professionals.
Valerie M Blake is a licensed Associate Broker in DC, Maryland and Virginia with RLAH Real Estate / @properties. Call or text her at 202-246-8602, email her at DCHomeQuest.com, or follow her on Facebook at TheRealst8ofAffairs.