A mentor used to say to me, “Don’t jump over hundreds to pick up dimes.” In other words, don’t try to save a few dimes if it will cost you big bucks in the end. Unfortunately, I see many real estate investors doing just this. Yes, it is important to spend money wisely, but it is equally important to invest in your business.
So, it boils down to this: When you cut corners or shave areas to save money, are you really saving money? Let’s look at a few areas where “picking up dimes” will cost you hundreds.
By now, you’ve heard of the three things to consider in order to buy and sell real estate: location, location, location. There’s a reason you’ve heard it. It’s because it is true.
Having a property in a good location allows you to sell your property faster. It allows you to rent your property for more money. It allows you to gain equity in your home faster.
Why is this true? Well, most things about a home can be changed. Is the kitchen outdated? That can be fixed. Are the closets too small? That can be fixed. Are the walls painted an ugly shade of brown? That can be fixed. Is the home in a bad neighborhood? Uh … well … there’s nothing to do about it.
- What makes a good location?
- Low crime rate
- Good school district
- Convenient access to amenities
- Access to highways
- Nice views
Finding the “right” house in the wrong location may look like a good idea, but it is a bad deal. Yes, you may save a few dimes when you buy, but you’ll miss out on hundreds when you sell.
Products and Materials
Cheap is sometimes just that – cheap. Let me explain by telling a story on myself. When I first got into investing, I found that I could purchase paint quite cheaply if I were willing to buy the leftovers. I mixed them together and came out with a color that was similar to mauve, but in a shade that nobody would voluntarily choose.
Then it was time to sell. Guess what the No. 1 thing was that people said about the house? They didn’t like the color of the walls. Eventually, I had to repaint the walls, costing me more in paint and in time. If I had painted it right the first time, I would have sold the house faster as well.
Although my story is about paint, the same is true for most products and materials. Think about the home, the potential buyers and what they see in similar homes in the area. Be sure that you are buying products and materials that are of similar quality.
Always think about:
- Light fixtures
- Bathroom fixtures
- Kitchen fixtures
Once again, you may feel like you are saving money when you install these products, but when it comes time to sell your investment property, you will quickly regret your decision. I know I did.