Remodeling For A Profit
I would like to share a story with you that actually
happened to a home that we were living in. In 2007 our house burned down
and we needed to get into a rental house as soon as possible. A real
estate friend of our found us a rental home that was in the process of
We told the owner, that we would only need a three month contract, which is hard to find, especially in the home rental market. He agreed, but he said that the house was going to remain up for sale and if it did sell it, we would need to move out as soon as possible. We agreed and moved into the home, but it never sold.
There were plenty of people remodeling for a profit in 2007, the only problem was that the market was starting to collapse. I knew one guy who bought a house for $560,000 and sold it within one month for $710,000, without doing much to the home. This stuff was happening all over the place and I could easily understand how this particular homeowner got caught up in it all.
He bought the house for $375,000 and was planning on remodeling for a profit. By looking at the remodeling work that he'd did, I would estimate that he put at least $75,000 into the house. This puts his total cost at $450,000. He was trying to sell the home for $475,000, but the market was collapsing faster than he could ever dream it actually would have.
It's been almost 2 years since we lived there and I drive by the home regularly. I believe that he still owns the house and I have already seen at least two other families that have moved in and out by now. I don't think that he could even sell the home today for $300,000.
The next time that someone tells you how easy it is to remodel for profit, remember this story. I'm not saying that things aren't going to get better, because I know that they will. There is a very good chance that he will eventually sell the home for more money than he invested into it, but who knows how long it will take, before he actually can.