Don’t Overcapitalize on your Reno Project

October 2nd, 2008 Maricel Ferrer-Custodio

house painting Right now, the real estate slump is big news everywhere.  Everyone is urged to save for more tough times ahead.

The recent real estate turmoil is a reality check that we should spend our money more wisely.  Finding value in your real estate investments is the new name of the game.

If you have to renovate, make sure you concentrate on the things that would add the most value in your house.

HGTV.com has a good list of top home updates that will provide the maximum return at resale.

HGTV’s Top 15 Home Updates

  1. Minor Bathroom Remodel
  2. Landscaping
  3. Minor Kitchen Remodel
  4. Vinyl Siding, Fresh Paint, Front Entry
  5. Attic Bedroom Conversion
  6. Major Bathroom Remodel
  7. Major Kitchen Remodel
  8. Deck, Patio or Porch Addition
  9. Basement Remodel
  10. Replacement Windows
  11. Family Room
  12. Bonus Room Updates
  13. Living Room Updates – Decor
  14. Bedroom Updates
  15. Living Room Updates

If you noticed, the ones that provided the most return are the ones that cost the least.  Thus, spending more on renovations does not guarantee that you’ll get more come selling time.

Make sure that your total cost does not go over the market price of your property.  Capitalize on the essentials and the areas which can have a maximum impact.  Get several quotes to make sure you’re not paying too much for your renovation project.  If you think you can do-it-yourself then do it!  Just make sure that you leave the major repairs to the experts such as electricity and plumbing.

Be creative!  Sometimes it can give you a better return than the most expensive decor.  Browse the net for some inspirations.  You can even checkout auction sites such as eBay for some great bargains.

Remember, whatever money you save now means more profit later when you sell.

Photo Source: Flickr.com by Just Taken Pics

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Posted in Home Renovation, Investment Tips, Top 10 Lists

Logic Over Emotion, a Must in Real Estate Investment

August 20th, 2008 Maricel Ferrer-Custodio

two men Two people who invested in two different real estate properties at the same time, who started with the same amount of capital, can have a significant difference in realized profit and income. One can come up with a winning property that will have a strong potential for capital growth and income.  Meanwhile, the other investor can end up with a property that is not only draining his finances, but suffering from negative equity as well. Both started in real estate investment in good spirits, but one ended up in a losing streak.

Actually, real estate investment is not really about being lucky, unlucky, good vibes or bad vibes.  It is a business of logic.  Sadly, just like most buying attitudes, many buyers are easily persuaded by their emotional convictions.

Some people are easily convinced to invest on a property based on its price, presentation and ambience.  These are what make the product standout in the marketplace from a marketing perspective.  However, these are not the main things to consider from a financial or investment standpoint.

The price can be a deciding factor in terms of budget range.  However, it should be analyzed together with location, rental income, existing infrastructures within the area, future developments, job availability, demographics and security.

The price by itself cannot be the main consideration.  In fact, many people lost more money in considering price alone.  Anything that has a cheap tag price does not mean it is a bargain.  It can be cheap because of the existing high crime rate or the trend of foreclosures within the area.  It could also be due to structural problems with the building.

Failing to distinguish a real bargain can make or break the deal.  If the property comes with negative issues that are beyond your control or would be too expensive to fix, then it is not a real bargain.  Come selling time, you might lose more money or sell cheap too, defying the purpose of buying the property as an investment.

Thus, next time you buy a property, analyze it well.  Although presentation helps, look beyond the physical attributes of the property.  Analyze all the other factors and do your own research about the area.  But most of all, do the necessary computations and study the existing statistics within the area.  Is your capital investment worth the risk? Does it have a good rental return?  What is the projected price growth in the area?  What was the historical price growth within the area? What are the recent sold prices?

In the end, property investment will always have risks involved just like any investment.  However, you can minimize the risk by being more logical about your real estate purchase.  You will have more assurance that you made the right choice.

How about you, did you have a good investment property?  Do you have any tips to share?

Photo Source:

Flickr.com by Stanrandom

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Posted in Buying a Home, Insights, Investment Tips

The Lure of Credit Cards, Hate It or Love It?

August 19th, 2008 Maricel Ferrer-Custodio

shopping Credit cards, plastic money, advance cash, whatever you call it; many people are attracted to its many benefits.  It gives the cardholder the ability to make instant purchases, even if they don’t have any money to spend.

In principle, credit cards are this century’s most powerful tool.  It allows people to purchase a lot of things from food, clothing, cars and travel.  You can also use it to pay the rent and in some cases, the deposit for your real estate purchase.

The love-hate relationship with your credit card starts when you can no longer afford to pay your purchases, especially if the accrued interest has blown out of proportion.  I’ve seen many people who earn big bucks faced with a mountain of debts due to their credit card purchases.  They started with purchases they can initially afford.  However, after maximizing their credit card limits, they realize that they spent way too much than they can actually afford.  It will take several months’ salary and sometimes several years’ income to pay for it.

However, the problem doesn’t stop there.  It is like an addiction that is hard to control.  Even if people realize that they are faced with a lot of debts, they are still lured to apply for more credit cards.  It can come to a point that it is almost impossible to pay for the total accumulated debt.

Overall, most debt counselors would recommend getting rid of credit cards.  However, in my opinion it is good to have one for as long as you know how to control it and it doesn’t control you.  For instance, don’t make any purchases that you can’t pay off without incurring any interest.  Take advantage of using it for big ticket purchases where you can convert the accumulated points for free travel or even gift cards.

In the end, if you can manage to handle your credit card debt, then you’re one step closer to owning your own home.  You won’t only show your potential lenders that you have  a good credit history, but you have the discipline in managing your debts, income and expenditures.

What’s your credit card experience? Do you love owning one or do you hate the debts that came with using it?

Foto Source:  Flicker.com by ralphbijker

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Posted in Buying a Home, Insights
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