“This house smells like money,” said my friend, the real estate investor, when she walked into a stinky, ugly, fixer-upper. She should know. She and her husband had purchased over a dozen ugly homes, remodeled them, and then either rented them or resold them for profit.
I purchased a smelly house myself when I purchased my first little one-story as a single woman. It wasn’t because I knew anything about investing in real estate, it was because that was all I could afford. The nice homes were all out of my price range.
Dog urine soaked carpet: it really stinks.
A stove that is crusted an inch thick with burned-on gunk doesn’t help the odor any.
When my loan closed on this little “gem” the first thing I did was get the carpet and stove hauled to the dump.
I had intended to have the hardwood floors refinished, but the hardwood company said the stains were too deep to get out. I didn’t have the funds to rip out and replace floors, so I had a fresh new carpet installed instead. Walls were painted. New light switch covers, the pretty kind, replaced the yucky old ones.
Within a year, the water heater went out, so that was an unavoidable expense. At the same time, it was necessary to replace the toilet in the bathroom.
The house was located on a cul-de-sac, which was great for privacy. I told my kids they could ride their bikes on the street and streets heading east. Under no circumstances were they to ride west, three blocks up to the highway that ran past the airport hotels — and if you are an adult, I am sure you can guess why that part of town was unsuitable.
We lived in that little white house with green shutters for three years.
During that time, I worked hard and increased my income. Then it was time to sell and move into a nicer home in a better neighborhood. The real estate market was good, the house was clean and attractive in a Bohemian, carefree style. I sold for a profit. And get this…
When I added up my net profit (after paying off the loan, closing costs, excise tax, and realtor fee), and then subtracted the cost of cleaning up the house and the cost of my total mortgage payment…
The numbers showed I had lived there FOR FREE and had actually made money every month!
This is why I tell people not to wait until they can afford their dream home with the hardwoods and granite countertops. Don’t wait until you can buy in the most desirable part of town.
And, don’t wait until you have 20% down. You can get a mortgage with only 3% to 3.5% down.
Get yourself a good Buyer’s Agent, a licensed real estate agent who knows the neighborhood, to help you locate a property. A Buyer’s Agent costs you NOTHING. The seller pays all agent fees, not you. I had a good, experienced agent who scouted out the little white house and negotiated a good price.
Buy that stinky house that smells like money if that is what it takes to get your start in real estate.