Friday, August 28, 2009

Repairing Investment Property

We can do this by buying a home in need of repair. Homes in need of repair do not, as a class, always provide profit – certain criteria must be met. First, find out the new construction cost per square foot of the area which you are buying, and then find out the cost per square foot of the home which you are buying. Find the difference. Now, make a good estimate of the repair costs. The repairs needed should only be surface-level; the foundation of the home should be solid. The repair costs should be half or less the difference. This way, for every dollar you put into the home, you are receiving two (or more) back. The great thing about this strategy is, if there is any appreciation, you will still benefit from it. But, if there is no appreciation, we have still assured ourselves a profit.

This repair cost method combined with our margin of safety concept provides us with an investment that is both safe and profitable beyond a reasonable doubt.

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