I'm Ryan, and live in Studio City, CA. Just joined BiggerPockets and think it's great.
I have a question for you:
I just purchased a Coldwater Canyon condo for $360k in Studio City (appraised for $395k), and it is in low-average condition. The unit next door is in great shape/move-in ready, and is in escrow for $420k; identical floor plan and space. In order to bring my unit up to almost the same shape, it will cost about $25k (update kitchen & appliances; flooring, update bathrooms, dual pane windows, scrape ceilings, paint, etc.)
Is it worth $25k investment to upgrade the condominium and then sell (based on the value of the unit in escrow); or should I do the basics (new paint, rugs) and then sell (based on the appraised value)?
I can certainly "run the numbers" and make a decision based on just that...but would like to hear from some of the members regarding doing the improvements and selling versus not doing the improvements and selling...and if there is something I'm missing in all of this besides just numbers?
The "profit" is $35K in both cases. $395K - $360K = $35K and $420K - $395K = $35K. The question is how much work/time you want to put in.
The other question is if you sell it "AS IS" can you actually get the appraised value?? The sellers were unable to get the appraised value when they sold it to you.
Barbara and Wendy,
Thanks for the quick replies.
There were several reasons the property did not sell for the appraised value (which worked out great for me): it was a probate sale; the listing real estate agent considers himself a pro photographer but his photos were terrible...blurry, bad lighting, rooms were messy w/food left out, etc., so it was very run down looking; the executor and lien holders wanted the unit sold as quickly as possible and did not care for how much as long as the it was enough to satisfy all the lien holders.
Wendy -- good point. Maybe I will do some light remodelling and put it up for sale and move on to the next one.
Retail buyers have little or no 'vision' and are rarely able to see beyond a poorly presented offering.
If your ultimate offer is strong, very well presented and aggressively marketed, you will need to either be the top of the market or slightly under to attract a strong, well-qualified buyer.
If it were me, I'd focus on thinking about the end buyer you want to sell to. Any chance you'd find a cash buyer who take one step inside and says, "I'll take it" and no squabbles?
Welcome to Bigger Pockets.