5 Tips for Remodeling a Foreclosure on a Tight Budget

Adding so-called sweat equity to a property - in other words, investing elbow grease to make it more attractive to a buyer - is one of the basic keys to financial success for foreclosure investors. We all know that sometimes to make money you need to spend money, but at the same time it is critical to keep control of your budget so that you don't erase your precious profit margins.

The whole idea of upgrades is to add net value, and the bottom line for equity has to be calculated by first subtracting all your expenses - both in terms of money and in terms of your valuable time. With that goal in mind, here are five smart tips for maximizing your profits while doing easy property improvements.

#1

Paint Works Wonders

Paint and caulk are two of the best labor and money saving resources for the foreclosure investor. Use neutral colors because they cost less and won't clash with a buyer's taste or decorating scheme. The trick is to take the time to do a neat and tidy job, because even if you use designer paint nothing will detract like a sloppy paint job. Neatness counts, so prep and caulk ahead of time with attention to detail. If you do meticulous prep work you can use cheap contractor grade paint and still get spectacular results.

#2

Carpet is Convenient

Even if a house has hardwood floors, they may be in such bad condition that it is better to just cover them in carpet rather than trying to refinish them. Carpet is also a great way to hide an ugly vinyl or tile floor, and you can often find beautiful carpet at discount stores for a bargain basement price. Many carpet sellers will also deliver and install it for free, which saves you both time and money.

#3

Good Things Come in Small Packages

Sometimes homeowners spruce up the house with all sorts of expensive improvements, but then they ignore unsightly small details and that cancels out the entire effort. Small fixes are often just as valuable as the major ones in terms of marketing appeal, so take care of little repairs like inoperative doorbells, missing doorknobs, cracked window panes, torn screens, stained ceilings, and messy landscapes. They don't cost much and they convey valuable pride of ownership.

#4

Concentrate on High Impact Features

Rather than remodeling the whole kitchen or bathroom, you can just focus on items that produce the most impact. For example, instead of installing a new bathroom, just replace the toilet and resurface the tub and sink. Put a new stove in the kitchen, install bright lights, and lay down some bright linoleum and you can achieve huge results on a tiny budget.

#5

Stick to Your Schedule and Budget

Sometimes a piece of yarn will come loose on a sweater, but if you keep pulling on it you will unravel the entire garment. Similarly, it is easy to keep doing just one more thing - or buying one more fixture - until your small remodel turns into a bank-busting project that stretches on for months of delays. Know when to stop, and you'll finish faster with less money for higher net profits.

Although you may have the skills to perform your own do-it-yourself home improvements, don't get so bogged down in tedious tasks that you lose sight of your main goal of foreclosure investing. Prioritize your time, and if it is more lucrative to hire out some of your home improvement tasks don't hesitate to do so. That way you can still supervise the work without having to be on site with your sleeves rolled up the entire time.

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