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Wednesday, August 29, 2007

Neglected Properties = Big Bucks (a case study)

The signs of neglect like bad paint, stinky carpet, holes in the walls or (heaven forbid) termites will turn off 95% of prospective buyers. All of these inflictions on a once beautiful home are purely superficial, and if you have the foresight to see beyond them, you can build wealth fast in real estate.

Put in a few thousand dollars, and this house will be a beautiful home again; your investment will increase in appraised value many times more than what you put into the repairs. Unlike "reality TV" shows like Flip That House, this I know from personal experience. Trust me.

Have a look at the following example.

I purchased this house as a bank pre-foreclosure at $35,000 below market value. Many of the houses in this neighborhood are built as cottages, and I saw tremendous rental potential for the property once it was fixed up. I knew it would be a cute rental home for a small family or couple, especially given its proximity to employers, retail shopping and restaurants.

The "Before" Images:

Ugly baby blue walls, stained carpet, damp smelling.

Termite and water damage. Sunlight is actually visible through the wall.

Termite damage on an interior door going into utility closet.

The backdoor, with rot and termite damage.

The "after" images:

Looks (and smells) much better!

Is this the same corner? No more sunlight.

No more termites, or damage.

The backdoor, much improved...

BEHOLD! The finished product.
{Now equipped with a tenant.}

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