We've all seen the "Ugly House" billboards that shout to the world, "We Buy Ugly Homes." There is a reason this business continues to profit all over the country. There is money to be made in ugly houses.
The popularity of the house flipping business opportunity has encouraged numerous TV shows and other learning opportunities such as Tarek & Christina Seminars. The enthusiasm surrounding this business opportunity is palpable. Investors should be forewarned though. Without a good business plan, you can lose a lot of money.
Real estate investment success relies on an investor's ability to buy low and sell high. As the old adage states, the devil is definitely in the details. Many real estate investors claim that the money is made based on the price of the initial purchase. Identifying and selecting the best homes to flip based on attractive margins is critical. That's why ugly houses offer a viable buying option for hungry investors in search of their next deal.
Below are the reasons investors love ugly houses.
1. There is less buyer competition.
While there may be some competition from investors for ugly homes, there won't be too much competition from retail homebuyers looking for their next home. This fact automatically drives the price down as house flippers drive the prices down from a retail price point to wholesale pricing. There is no denying the fact that investors seek profits as their main motivation, but scheduling issues, preferred zip codes and other factors guide investor decisions too.
2. The price of an ugly house is often depressed for identifiable reasons.
A common scenario responsible for the ugly house phenomenon is that a home is older and has not been updated like other homes in the neighborhood. This keeps the price down since most homebuyers don't want to spend the money and time required to update the home. This means the price will be much less than a similar home that has new appliances and upgraded finishes.
3. Ugly homes are easy to identify as possible deals.
As mentioned earlier, finding a good deal is about identifying the best opportunities. Ugly homes stand out. These undesirable properties often sit on the market for awhile as sellers try and sell their home for higher prices than the market will support. Sometimes it takes unrealistic sellers some time to realize that their home is indeed an ugly home and will not command a retail price comparable to other homes in the area.
At that point, sellers start considering their options. This timeframe is when sellers are open to negotiating with investors
4. Inexpensive cosmetic changes can bolster profit margins significantly.
The good news for investors is that many of the best investment properties only need cosmetic repairs to transform them from an eyesore to a desirable family dream house. Learning what to look for as an investor is extremely important. Tarek & Christina Seminars can teach anyone about how to evaluate properties. Simple fixes such as landscaping, new kitchen cabinets and a paint job can sometimes turn an ugly duckling into home sweet home.
5. There are well-built, ugly houses available in popular zip code areas.
Location is everything in real estate. Ugly homes are often located in highly desirable neighborhoods. Some of the best profit margins can be found in these locales. Since ugly homes often come on the market as the result of an older couple needing to sell, many of these homes are in great neighborhoods and are only considered subpar because they have not been updated. Large margins found in popular neighborhoods can be gold for investors.
Ugly homes turn profits for astute investors who know how to transform them into sweet properties. Identifying these diamonds in the rough is crucial for investor success. There are undeniable reasons for tapping into this profitable market.
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