When I started renovating homes almost 20 years ago (i.e., not a spring chicken anymore), I was working in the entertainment industry at the time. If anyone out there understands film production, you’ll know that it is an industry in which project planning is drilled into a film maker’s DNA. Dealing with extremely large budgets, such as those in the film industry, requires a creative team to document every step of the project in the planning stage before you can even pitch it to investors. The same is true with home renovations. Picking a house to renovate is a huge step in and of itself. You must carefully inspect a property before you pull the trigger on the purchase, no matter how good of a deal it seems on paper. When I started renovating homes almost 20 years ago (i.e., not a spring chicken anymore), I was working in the entertainment industry at the time. If anyone out there understands film production, you’ll know that it is an industry in which project planning is drilled into a film maker’s DNA. Dealing with extremely large budgets, such as those in the film industry, requires a creative team to document every step of the project in the planning stage before you can even pitch it to investors. The same is true with home renovations. Picking a house to renovate is a huge step in and of itself. You must carefully inspect a property before you pull the trigger on the purchase, no matter how good of a deal it seems on paper.
With that said, let’s talk home buying first. Personally, I have a financial planning spreadsheet that I use to track every detail about the house or multiple homes that I am looking at, which is a huge help in determining financial risk even before I purchase a property. Yes, I have a master’s degree in business as well, so I have been professionally trained in net present value calculations, and other formulas to predict the profitability of a project. I highly recommend to anyone who does not have formal education in financial and statistical analysis, to take some courses first before taking the plunge head first into this business. Chip and Joanna Gaines, the hosts of Fixer Upper, were both involved in their own family businesses prior to starting their home renovation and design show on HGTV, and chip was already an experienced General Contractor. Please do not be “fooled” by the so-called home renovation Reality Shows…OR…the stars of those shows who travel around collecting fees from unsuspecting “wanna be home flippers” across the country who think they can attend a one day, $2500.00 + seminar about property flipping, and will be provided some fantastic secrets during that two hour seminar that will make you immediately successful in the home renovation and selling business. Do not attend those seminars please – you may as well set your money on fire!!! With that said, let’s talk home buying first. Personally, I have a financial planning spreadsheet that I use to track every detail about the house or multiple homes that I am looking at, which is a huge help in determining financial risk even before I purchase a property. Yes, I have a master’s degree in business as well, so I have been professionally trained in net present value calculations, and other formulas to predict the profitability of a project. I highly recommend to anyone who does not have formal education in financial and statistical analysis, to take some courses first before taking the plunge head first into this business. Chip and Joanna Gaines, the hosts of Fixer Upper, were both involved in their own family businesses prior to starting their home renovation and design show on HGTV, and chip was already an experienced General Contractor. Please do not be “fooled” by the so-called home renovation Reality Shows…OR…the stars of those shows who travel around collecting fees from unsuspecting “wanna be home flippers” across the country who think they can attend a one day, $2500.00 + seminar about property flipping, and will be provided some fantastic secrets during that two hour seminar that will make you immediately successful in the home renovation and selling business. Do not attend those seminars please – you may as well set your money on fire!!!
I do not mean to be discouraging at all, once you are armed with the right training, this can be a very fun and rewarding experience. I love renovating homes, restoring older homes to their former glory, or just trying something new with an innovative vintage style, such as the recent barn house renovation trend. I have a fantastic group of brilliant contractors, vendors, and fellow design and renovation colleagues that I consult with on a regular basis. I also have financial investors who I know and trust, and will work with sometimes as needed on a project. This is another area where I want to caution people. Make sure that you personally know and have references from other experienced and legitimate home renovation professionals, before you take any money from an investor. You can get yourself into some serious trouble if you do not know what you are doing with these investors who call themselves “hard money lenders.” If you attend any of these “home flipping” seminars that I mentioned above, these “hard money lenders” will be there, I guarantee you, looking for “wanna be flippers” to prey upon, who need money to get started. Again, I highly recommend steering clear of any home buying seminars. I know this may be difficult to hear, but if you do not have any cash or good credit to take out a conventional mortgage to get started, then the home buying/renovation/design business may not be a good fit for you. You absolutely must have cash, and be able to take financial risk. Also, please do not buy properties at online or in-person auctions if you are new to this…those can be absolute nightmares when it comes to liens and other legal attachments to those properties, which could leave you upside down and stuck with a house that you cannot get rid of. Unless you are an experienced home buyer or an attorney who knows how to do all of the background research on an auction property that is required, stay away!I do not mean to be discouraging at all, once you are armed with the right training, this can be a very fun and rewarding experience. I love renovating homes, restoring older homes to their former glory, or just trying something new with an innovative vintage style, such as the recent barn house renovation trend. I have a fantastic group of brilliant contractors, vendors, and fellow design and renovation colleagues that I consult with on a regular basis. I also have financial investors who I know and trust, and will work with sometimes as needed on a project. This is another area where I want to caution people. Make sure that you personally know and have references from other experienced and legitimate home renovation professionals, before you take any money from an investor. You can get yourself into some serious trouble if you do not know what you are doing with these investors who call themselves “hard money lenders.” If you attend any of these “home flipping” seminars that I mentioned above, these “hard money lenders” will be there, I guarantee you, looking for “wanna be flippers” to prey upon, who need money to get started. Again, I highly recommend steering clear of any home buying seminars. I know this may be difficult to hear, but if you do not have any cash or good credit to take out a conventional mortgage to get started, then the home buying/renovation/design business may not be a good fit for you. You absolutely must have cash, and be able to take financial risk. Also, please do not buy properties at online or in-person auctions if you are new to this…those can be absolute nightmares when it comes to liens and other legal attachments to those properties, which could leave you upside down and stuck with a house that you cannot get rid of. Unless you are an experienced home buyer or an attorney who knows how to do all of the background research on an auction property that is required, stay away!
Let’s stop with these home buying pre-planning tips for now. Take it away as food for thought. I’ll follow-up soon with how to select an older home, and what red flags to look for during the home inspection process.Let’s stop with these home buying pre-planning tips for now. Take it away as food for thought. I’ll follow-up soon with how to select an older home, and what red flags to look for during the home inspection process.
Melissa Courval 