Get rich quick in real estate...

... and other schemes. Have you received calls from your nocturnal clients who watch infomercials promising great buys and quick profits in real estate? I get these calls periodically - mostly to ask if these opportunites exist locally. They don't. The market in Connecticut is slow, but not that bad. To give you some indication of our optimism, there is a house in New Haven with contaminated soil that is still listed above $200K. For a similar amount you can purchase a house without a kitchen in North Haven. In either case, the cost of rehab and/or remediation would far exceed the current fair market value of the finished product.

There is money in Sweat Equity, not in Flipping. Buyers willing to buy a home that needs TLC will probably do just fine over time. If they are going to be living in a neighborhood they like and slowly improve the house, they should build equity in the next few years. Statistics bear this out - people make money on houses they have owned over a decade. If they think they are going to buy a wreck to rehab and flip, I will bet they are going to loose money. The cost of labor in Connecticut is very high, and anyone who has priced building materials knows that projects are going to cost substantially more than anticipated. Carpenters have an edge in that they can do the work themselves, if they can find the time.

Foreclosed properties are often in nightmarish shape. They are also sold "as is, where is". I prefer to sell the probate properties, that often just need cosmetic work and relatively minor repairs. Bathrooms and kitchen may be "dated" in probate properties, but they are in working order. Buyers can move in and start to modernize, hopefully one project at a time. The greatest danger to buyers today is to try to do too much at once. Start a project and finish it! I have seen several situations over the years where buyers started demolition in several rooms at once, ran out of money, and walked away from the house in frustration and defeat.

As professionals, let's use this time to identify homes in our market areas that are the true "diamonds in the rough". By advising our clients to purchase these homes, we can help them build equity without all the gimmicks.