Being Frugal Doesn't Mean Being Cheap!!

We've all heard that saying "You get what you pay for". Well, it certainly applies to real estate. We all want the deal of a lifetime, but the trick is not to get blind-sided by something that's too good to be true. We can all be budget conscious without giving up value. So be Frugal.....Not Cheap.

This applies to both buyers and sellers of real estate, although the specific parameters may be different. When you're buying a home you want what you'll feel comfortable living in, can afford and what works best with your current lifestyle. In investing, you want what can make you money in both the short and long term. An investor may not be as concerned about aesthetics like a home buyer might be, but location is still important for both. And of course, budget is key. I've seen many people buy properties that are cheap, fix them up, resell for a profit and be successful at doing so. That's awesome, but that also comes with knowledge and finesse. You don't want to bite off more than you can chew by buying a money pit. Also, you don't want to waste your time analyzing, bidding and then find out during the inspection that the roof leaks, the walls are bowed and foundation is majorly cracked. Unless you know what you're doing, don't be tempted to buy cheap properties in a distressed area. Do your due diligence ahead of time. Make a list of wants vs needs. Do you really need that 1st floor master suite or is it more of a want? Do you need a garage now or is there room to build one later? Are you ok with buying a multi that may not have active tenants, knowing what you can get for rent. or already have good leads on paying tenants? Looking at items like this can potentially save money right now. I've often heard that buying the lowest price home in the highest priced neighborhood is a good recommendation. Maybe....Maybe not. All properties are not created equal. Sure, buyers have the ability to negotiate, but in our current seller's market, price may not be one of them. So you may have to invest a bit more to get more. Same thing goes if you're buying and planning to remodel that fixer-upper.

So you found the home you want or the investment property that has great potential. And now you would like to remodel. Fantastic. You may at this point be tempted to hire the contractor that gives you the lowest bid, use materials that will save you a ton of money, or cut corners to reach your budget goals. I'm not saying these are bad things upfront, but weigh these factors carefully. Sometimes the initial bid doesn't always remain the final price. Standard allowances need to be made. Also saving money on materials is great, but ask yourself if doing so is going to give you the same end result? A home buyer might spend more on a specific remodeling aspect simply because this will become their personal residence, but we all need to be aware of resale value. For example, choosing formica over granite or buying new cabinets vs. refacing should be weighed. Also knowing that better remodeling investments are kitchens and bathrooms rather than man caves....sorry guys!! An investor absolutely must be cautious to ensure their property is still profitable. The thing that no one wants is to spend hard earned money remodeling at a discount only to have to do it again in a couple of years when things are falling apart. Of course there are exceptions often found when some people are doing a quick flip. But there's generally an understanding that you will get a return that is dependent on what you've put into it. Just make sure you are investing in something that will indeed be worth it.
Quick note: Buyer beware. You may see a few people buying properties extremely cheap, putting just a few bucks into it and trying to turn it around for a price gouging profit. Do your due diligence. Go on to the county website and look what the person paid for it vs. what they are reselling it for. Is the cost of renovation including customary profit difference warranted or not? Everyone wants to make a profit but it comes with proper planning and well....fairness. And if you're the seller, you know what that means.

So ideally, making a profit when selling your real estate investment is key, both as a home owner and as an investor. So watch the market carefully. Right now we are still in a seller's market, so properties are often being sold at or above asking price. Not so good news for buyers but there are still deals to be had. And remember, some things are subjective. Sometimes properties are overpriced or underpriced. So analyze the market and the individual properties. Remember, it's the appraisal that becomes the final word on a property's valuation. As a seller you may be tempted to FSBO a property rather than use an industry professional. If you can do it ethically and legally, go for it. However just know that by using an industry professional to sell your home or investment property, you're investing money well worth spending in the long run. For example, a Realtor has a fiduciary responsibility to their clients, therefore they must keep you compliant, legal and ethical in your dealings. I'm aware that some people have horror stories dealing with a Realtor. Just as all properties are not created equal, all realtors are not created equal. So again, do your due diligence. The last thing anyone wants is a lawsuit for cutting corners. That's not saving money. It could instead be financially devastating.
Bottom line, go ahead and save some money along the way, but be smart about it. You can still be frugal without being cheap!!!