My wife and I made a huge decision about a year ago. We needed more space for our family (Four kids, my wife, and I). We were bursting out of our three bedroom house. Plus I wanted to get a little more land. We found a foreclosed place that had 4 bedrooms and 3 bathrooms with a little over an acre. I was able to purchase this while keeping our old house. Which for a foreclosed home is good. Most banks do not want to wait for another house to sell especially when a market like weiser's is so unpredictable. This was good for us also because we were able to make some improvements and fix a few things before we moved in. I added another bedroom in the basement and remodeled the kitchen put new carpets through 80% of the home. Downside is this all costs money and time. Plus we now have two house payments.
We worked on getting a renter to relieve some of the costs with owning the other home. But we still only had the same amount of money coming in before the big purchase. So we had to cut back on extras. Changing our lifestyle from what we were used to. Cut back on eating out, going away on weekends, or other entertaining. It was worth it for us because we needed more space. Which out weighed all other wants. If we would have not kept both properties we would still be in our old home not able to purchase our new one. Don't forget we would have been cramped. (Oh, and we added another teenager)
As we worked through our decision we had to consider how much we were spending on both places and how much we income we had left to do repairs. We decided to purchase the property. Now we needed to figure out how long we could live in our old house while we repaired, added a room, and remodeled a few areas before moving in. This is how I broke it down as far as our supply (Workforce to complete projects) and our demand (time we had to complete all projects and move out of old house) Closed on the house and got to working on it. We had enough budgeted money to remodel the kitchen, paint rooms, add another bedroom, and replace carpet throughout the house. I had a dead line of little over a month in order to move out in time for our renters to move into the old house.
I had to prioritize what I could accomplish myself, what friends I could use to do some of it, and how my family could help, and what I needed to contract out in order to complete this in our allotted time. I hired out the carpets and counter tops to complete all projects within the demanded time. I had friends/family help rip out carpet, remove old kitchen, build the new bedroom, install electrical, sheet rock walls, paint, and place new cabinets for my kitchen. I contracted out the new carpets and counter top to save time. Sometimes the supply and demand in economics is not about consumers and goods. Sometimes it is just straight up how to get from point A to point B in an allotted amount of time. Good examples are road work and bridge work. Money is in place, the demand is to make the road/bridge in X amount of time and the supply is the workforce needed to complete this in that time frame.
(Blog Post #3)
When we decided to purchase our home we needed to figure out the elasticity of our new house. Whether or not we would get our utility out of it. So we found the new house. It had four bedrooms three bathrooms and was less then a $100 a square foot. Utility was good on this. Even when we added the extra room and fixed the kitchen it still kept the cost per square foot under $110. Well under average cost per square foot. Also filled the need for more space.
Now we had to make sure this investment would fill our needs and not cost us later on. Through looking at houses available and costs from current and previous sales/demand I found the market is pretty inelastic. Demand for property stays about the same whether price goes up or down. Property in the country with land was a little harder to find but the price is the same if you bought in town. So I found this house as a foreclosure which helped satisfy our utility and our budget.
(Blog Post #4)
I believe real estate is a perfect competition due to many people being able to build and sell property. All property prices are based on location, size, condition, and amenities. Market changes occur by how many houses are available. When there are more buyers than sellers prices will be higher due to demand. When there are more houses than buyers prices are lower.
Producers in this market are new builders, people who renovate and flip houses, people moving. Depending on location will depend on who will be competing. When there are new developments and an influx of buyers you will have new houses being built and many houses being flipped but not as many moving out of area. However it will change when demand is down more people just moving vs new builders and renovators.
In this market can find your max margin vs your total cost by talking with realtors and doing market research. You know how much houses are selling for and you can flip or build new from this data. You will be able to keep your total cost down by buying or building during a buyer’s market. In turn maximizing this profit during a seller’s market.
In conclusion you can maximize your profit by purchasing within your budget and doing repairs that will help sell your house in the future. When purchasing a home you can make the same choices doing the same research. Keeping money in your pocket. Making a sound investment instead of just another purchase.