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How much should I spend on fixing up a house? It all depends on whether you are a seasoned investor or a novice. Our rule of thumb is that for every dollar you spend you should expect to increase the value by at least $2. If this won't happen, don't do it. For a couple of years I've been mulling over the idea of real estate investing. However, I am afraid I missed the boat and feel that the market has peaked. Real estate is a cyclical business. Sometimes its easier to find good buys, and sometimes it is not. However, in any market there are opportunities to make money in real estate. For example, you can find a good buy with a fixer-upper because most buyers don't want the hassle of fix-up work. Plus you add to the building's value and do not depend only on the market force. I work full-time and have little savings. Where should I make my first investment? For the first-time investor, buy a 1-to-4 residential unit in a low to middle income neighborhood within 1/2 hour's drive from where you live. Prices are affordable for more people and you don't need large capital. And it is easy to inspect the house, do repairs, and show it to potential tenants. How can I make money on a fixer-upper? The most profitable fixer-uppers need only cosmetic work like paint, landscaping, new light fixtures, or new carpeting. Avoid properties that need major repairs like a new roof, removal of walls, foundation repairs or structural work. Once you are experienced enough you can think of adding rooms, bathrooms, second stories, and so on. Once I choose the type of property I want and know which area I want to buy in, how do a find a good buy? 1) Drive through the neighborhood and look for properties in distress or in a state of neglect- look for dry grass, chipped paint, or broken fences. 2) Look in classified ads in local newspapers 3) Consult real estate agents. 4) Look for notice of defaults/foreclosures 5) Check with government agencies 6) Search on the Internet. I am ambitious but I don't have any money. I know how to fix and repair houses and am willing to learn and work hard. What is the best way to start building wealth in real estate? The best way is to use other people's money by forming partnerships where you offer your expertise, time and effort and the investor offers the capital. If you don't have access to investors we might be able to help match you with them. What is a "FICO" score? FICO scoring, or credit-risk scoring, is based on a mathematical model developed by Fair, Isaac & Co. and draws on consumer data kept within the nation's three largest credit bureaus, Experian, Equifax and Trans Union. The higher the score, the more the person is considered to be credit-worthy. |
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