One Way to Sell a House for More
(An excerpt from 69
Ways To Make Money In Real Estate)
By Steve Gillman - 2006
Most investors don't think of increasing the value of a neighborhood
to sell their properties for more. This gives you an advantage
over them if you use this strategy. Of course, this can be a
time-consuming and difficult process.
Often houses sell cheap because of the condition of the neighborhood.
Raise the value of the neighborhood and you raise the value of
any houses you own there. But how do you do that?
Improve the Neighborhood
The simplest way to bring up the perceived value of the neighborhood?
First, simply do what you can with your own property. Many people
have noticed that when they clean up their yards and paint their
homes and do some landscaping, others soon follow. Whether your
example encourages others or makes them ashamed of their own
yards, the effect can be a nicer-looking neighborhood with higher
property values.
It may be worth trying if you have an investment property
or your own home to sell. But you don't want to count on this
simple strategy if you invest in property with the idea of raising
the values in the area. You need a more comprehensive plan for
this.
An investor once told me how he renovated a neighborhood in
Philadelphia. He bought more than half the homes on the two streets
he was targeting. Then he fixed them all up nice. He even paid
for improvements on one or two homes that weren't his. He lobbied
for more police patrols, and started a neighborhood watch program.
Then comes the part I hesitate to mention. It borders on unethical,
although the result was a better situation for everyone involved.
He used a couple of his companies to buy some of the renovated
homes. This was to get some sales at the new higher prices on
the books, so the appraisals would come in high enough for banks
to finance the properties (appraisers use recent sales in the
area to determine value).
By the time he had sold them all the homes were selling for
three times what he paid. The neighborhood was revitalized. The
new owners maintained the homes, and so the values continued
to rise. A nicer safer neighborhood and a lot of profit - not
a bad outcome.
Other Things to Try
If you have just a couple properties in the neighborhood,
you are limited in how much you can spend to improve the neighborhood.
There are some thing that don't cost much, however. Here are
some suggestions.
If there are any vacant lots with garbage in them, pay some
kids to clean them up. You might have them chop down weeds or
mow the grass as well.
If there is an "island" or other common area in
the street, plant some flowers and get the grass mowed.
If there are any other properties for sale, encourage the
sellers to really clean them up. Let them know that you will
be doing the same, so all of you may be able to sell more easily
at higher prices.
Call the city to report junk cars and other eyesores that
violate city ordinances.
If you own several properties on a given street, you can spend
a bit more, maybe even trying things like buying paint for neighbors
who agree to paint their homes by a certain date. But even if
you have just one property, you can encourage a neighborhood
clean-up, start a neighborhood crime watch, and do other inexpensive
things that will raise the value of the neighborhood.
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