- Finding the right property
- Income properties
- Commercial Real Estate
The Ugly duckling is the investors dream. It is a good house that looks bad due to poor finishes. A house that show very poorly but that can be fixed very easily and quickly. A house that should have been staged before it ever hit the market. Many buyers and investors are unable to see the potential in an ugly house. This makes it possible to pick up ugly duckling houses for a lot less than they are worth.
To be able to find ugly ducklings you need to learn to disregard how a house looks and focus completely on how it could look. Ignore stuff that is cheap to fix and focus on inspecting things that are more expensive and time consuming to fix. You can make a lot of money if all the house needs is a facelift and you can buy it at a cheap price.
Ugly ducklings are most common among houses that have been empty for a long time or houses that has been owned by elderly individuals that haven’t renovated or modernized in a long time. These houses often displays very poorly by modern standards. Their color schemes and materials often make them feel a lot smaller than they really are. By replacing vinyl flooring with laminate or hardwood floors and repainting the house in a brighter color scheme you can usually make it feel a lot larger and increase the value of the house substantially.
It is not unusually that you can increase the value of the property with between 10 and 30% by investing a few thousands in paint and on finishes. You will get the best return on investment on work you do in the kitchen and bathroom. You should therefore focus the bulk of your efforts there.
Ugly duckling properties are good investments almost irregardless of your investment strategy. They make good flips that can be finished in a very short amount of time. An ugly duckling can often be put back on the market within 4-8 weeks of the purchase. They can also often give you a good return on your investment. They are also perfect for investors who are looking to add new income properties to their portfolios. They can quickly be turned into desirable rentals and can start earning you money almost from day one. Your renovations will also significantly increase the value of the property giving you more equity to use to finance new purchases.
We normally recommend against buying new properties before you finished renovating your last purchase but ugly duckling properties usually have enough hidden value that it can be justified to ignore this rule and buy several at the same time if you get the opportunity. Provided you have the resources to do so without risking your financial future.
Renovate the property to suit the type of renters that rents in the area where the house is located. Do not spend more than you have to. It is seldom worth to renovate a house to a standard that is higher than the standard that is expected in the area.