So, everybody seems to be investing in real estate in Nashville, must be easy, right?
Well, not exactly. While real estate investing is one way of getting a great return on your money, it isn't for the faint of heart. Having renovated and sold over 50+ single family homes and 15+ single and multi family properties in the Metro Nashville area, we have seen a thing or 2 (to say the least). Anywhere from a 3,000 sq. ft. house on Old Hickory Lake to a small 750 sq. ft. house in Old Hickory and anywhere in between. Over the next few weeks we will discuss 5 of the recurring themes that have reduced our bottom line and what we suggest you do to avoid that happening to you.
1. Unforeseen renovation expenses- before you purchase a property you should always do a thorough inspection, if you aren't sure what to look for or don't like lurking in those dank, dark crawl spaces or hot, stuffy attics sometimes filled with old fiberglass insulation you can always hire a professional home inspector to do it for you. However, even though all may seem well on the surface, if your plan is to rearrange an old floorplan to make more functional, tear out the old kitchen or bathrooms, or open the home up in any way at all, know there is always more than meets the eye that needs to be repaired. Things that come up often are: rotted subfloors underneath old tile or flooring, old insulation that needs to be removed and replaced, outdated framing that was sufficient by the old Codes standard but not by today's standards. And keep in mind in Davidson County if you pull a permit (which you should), the building inspector is more than likely going to require you to bring it up to current Code if you alter it in any way.
Ways to avoid this eating into your budget is to plan for a 20% contingency, then you know if you run into things you had not accounted for you are covered. So say your budget is $20K, add $4K to that. If all goes as planned and you don't have to use it, even better!
We are out in the field every day doing this stuff, so we are using these exact same tips we are sharing here every day in our business.
We welcome any comments/suggestions below to add to the discussion as we are always learning as well.
That is it for today, stay tuned until next time when we talk about the next money drain when renovating real estate, du du du dum, bad contractors.