Investigating potential can lead to surprising profits that others pass up
Sometimes that next great home to renovate may just be the home other investors are passing up. Often these are the homes that have bigger problems than kitchen updates or a new roof. It may take creativity to solve these more difficult investment property problems.
As a real estate investor, I am always in search of the right home, with the right numbers to support investing in it. But it’s the creative designer side of me that often looks past the numbers and finds ways to make those more difficult investments more profitable. Take this Spanish-style house for instance. Good bones, great curb appeal potential, swimming pool, good square footage, nice neighborhood, and great comps! So why did other investors keep passing on it? As I watched the price drop and the potential for a great profit grow, I asked myself “What could be so wrong with this house?” So, I decided to investigate this potential investment!
My footwork began, as with any investment properties I buy, without taking a single step. I always begin my research on a property by looking at a satellite view of it. I look for a number of different potential issues regarding the location. Some of these issues I might be able to solve, and others may be completely out of my control. I look for any kinds of neighboring issues such as an excess of cars parked in the neighbor’s driveway or junk piled in a neighbor’s backyard. Then I look at any infrastructure issues near the home such as high wires located too close, any double yellow lines on the street in front of the home indicating a high traffic road, is it near a busy stop sign or traffic lights, across from a school, fire station or hospital, or (in the case of this Spanish-style house) located next to a major freeway.
Once establishing that this house was located uncomfortably close to a highly travelled freeway, I concluded that this was the reason this home had been sitting on the market longer than it should have. Because I had a good idea of what I’d be walking into, I felt the home was still worth taking a closer look at. Upon driving up to the house you could see it did have potential for great curb appeal and was in a very clean, desirable neighborhood! However, I opened the car door and the sound of rushing cars driving down the freeway was an immediate turn off. At that point I knew any investor/buyer would have gotten back in their car saying, “No Thank You!” and would not have taken a further look. This home was in desperate need of a creative solution!
Since I always love a good challenge, I felt the need to keep investigating the situation and come up with a solution. I began by imagining approaching the home from my car as though I were a potential buyer. How would they park and approach the home themselves? The home had a large driveway and the front of the home lent itself to creating a courtyard feel to it, which would be in keeping with the Spanish design of the home.
Then it dawned on me that the perfect solution to help mask the sound of cars would be to add a water feature to the courtyard! If I could find an outdoor water fountain with a substantial pump to move enough water, it could very well create a pleasant sound that could cover up the unpleasant sound of the freeway. . Water features also evoke resort living which comes across as relaxing and soothing.
With this home having great curb appeal and now creating an intriguing sound for buyers to hear when arriving at the home, a creative solution was all it would take to help buyers move past the front of the home and on to the inside! Once inside this home the construction was solid with thick walls and good insulation, which completely covered any outside sounds. After staging the home to create a cozy feel during our open house we included background music to further give the home a more realistic feel of how it might feel once being lived in. Moving on to the back patio where you found a swimming pool, again another water feature was added to create a soothing sound.
Taking this home and not only creating something beautiful to look at but also taking on and addressing a sound challenge as well was just the solution this investment property needed. In the end this home was sold for full asking price the first day on the market. It may have been a bigger risk than other homes I invest in, but because of that the reward was that much greater! Finding creative solutions to those more difficult investment properties can mean big dollars in return in the end.