Big Money in Cosmetic Fixes

As discussed last week, you can turn a 10% gain into a 100% gain using your sweat equity on the right real estate asset. Grabbing up run=down properties worked miracles for me, eventually adding millions of dollars to my net worth. You can do the same thing. But, you ask, exactly how do I direct my efforts? What do I fix up to make the property worth more? The simple short answer is paint, carpet, cleaning and basic accessories such as attractive plants and pictures on the walls and a nice green lawn and shrubbery in the yard. This is because you would be buying property that doesn’t needs more than a face lift but which you can buy cheap simply because it looks bad.

Now if you are like me and not particularly good as a handyman then you’ll probably want to use what I call OPE–other people’s efforts. I hired high school kids for just a few bucks an hour. I found from experience that paying people hourly, if you can keep an eye on them, is far less expensive than getting bids on the work needed. I should also say that most fortunes are made through the use of OPM (other people’s money) as we mentioned in earlier posts. So OPM combined with OPE is your formula for great wealth with this approach.

I should also add that I am not very good with any kind of design or decoration decisions, inside or outside. So what did I do about that? Basically two things–I picked other people’s brains as well as copying success, both without cheating. Picking people’s brains is pretty easy since people like to talk about themselves and what they do for a living. I would simply take designers, architects and other professionals to lunch and pick their brains for the cost of a meal.

Copying success is not that hard either, it’s mainly a matter of paying attention to what works then doing the same thing. I will never forget the beat up little house that I bought that was in desperate need of a major design update on the front of this very sad structure. I was trying hard to figure out exactly what to do with the face of this house when the obvious solution suddenly hit me. The basic house structure and layout was almost identical to the house next door–even though you really had to look hard to notice that with my house being such a disaster. The house next door was absolutely beautiful and a delight to look at. It looked like “the little cottage in the woods” that we read about and picture when we were kids.

So what I did was essentially take the lazy man’s option and I had my people do an exact copy of that nice house in every detail– the exact same color of paint, the exact same window coverings and shutters and all the cutesy stuff around the yard and on the lawn. Bottom line, the house looked fantastic and I sold it in short order. There is one postscript to the story–the neighbor was irrate! So much so that he repainted and redesigned the front of his house as he didn’t want to live next door to an identical twin! I didn’t really blame him but it was a bit of compliment to him too. Not sure he saw that.

One big thing to keep in mind as you are using your own sweat equity or using OPE to do this fix up work, keep yourself totally motivated and firmly place in your head that this “grunt work” can and will turn a potential 10% gain into 100% gain. With those kinds of numbers and with enough time, it will turn thousands of dollars into millions!