Getting Real: Tips And Tricks For Real Estate Entrepreneurship
Kym Gold is a style icon (True Religion jeans), who recently hatched Style Union Home & authored The Gold Standard: How to Run an Empire.
Next to fashion, real estate has provided me with a challenge that's both creative and strategic: how to acquire, redesign and profitably sell properties. I fell into real estate accidentally at the age of 19. I was selling repurposed T-shirt seconds on the Venice Beach boardwalk, and it became so lucrative that I parked my profits in a Westside Los Angeles duplex. The seller wanted it back a week later for a $75,000 upsell. I took the profit and promptly put it down on a house in Malibu.
This bit of serendipity triggered my love for real estate and the beauty of a home. Though I spent the lion's share of my career in the fashion business, I redirected my love of style recently by building my sixth company, Style Union Home.
For those seeking to start down the entrepreneurial real estate path, let me offer a few walkway lights.
Be Open To Present Opportunities
The pandemic, married with very low interest rates, inspired many people to look outside big cities for a better quality of life. Consider properties in the suburbs or a bit further out in the exurbs. The reward? More bang for your buck and less congestion.
Some real estate opportunities are perennial. Embrace a property strategy that focuses on buying undervalued properties that can be easily renovated to enhance their value, then refinance the loan to utilize as a deposit on another property.
Buying properties in this historically hot market comes with another opportunity: being able to rent back to the seller. Buyers can make some income renting a house back to the seller for a few months until they're able to close on their next home.
Look For Smart Investments
Have you ever heard the joke, “What do real estate and kissing have in common? It's all about location, location, location!” It's common wisdom to look for the least expensive home in a great neighborhood. Check out bestcities.org, travelandleisure.com or a simple Google search for “best cities in the world” to get a feel for which neighborhoods are on the rise. A less-than-perfect house in a fantastic neighborhood is poised to appreciate; add a little love and the earned equity will turn a fixer-upper into a revenue gem.
Another avenue is to look for a simply designed house with good bones. One-story ranch homes with clean lines can be more easily redesigned and modernized. Contemporary house lines open all possibilities for interior design to be anything you want; ethnic kilim rugs and woods work just as well as shiny dark floors with high style glass and chrome. Whatever you do, choose a style, and stick with it throughout the space.
If you can buy a house in foreclosure, you can probably get a great deal. Your purchase price should also be based on anticipated renovation costs. Apply the 70% ARV Rule: An investor should not pay more than 70% of the after-repair value of a property minus the repairs needed.
Get creative with financing. If you can find a stressed seller, chances are you will get a great deal. You could also think about renting to buy at a fixed interest rate, so you don't have to find a renter. You may get them to provide seller financing, lending you part of the purchase price to get in and they get a larger sell price in the end.
Make Smart Renovations
With more of us at home during the pandemic, we saw an increase in the demand for functional spaces. Architects worked overtime designing home offices, exercise/yoga rooms and flex-areas for homeschooling. Some of the largest home builders are developing houses now with office conversion designs. If property space allows, you may also consider adding a detached guest house, which buyers could rent to offset mortgage costs.
When designing or staging a house, you want to make it cohesive and cozy, a place where people can envision relaxing and entertaining. Use wood and leather to warm a room and splashes of color to brighten it up. I keep a closet filled with different types of pillows to change out with the seasons. Themes can evoke specific geography such as using tile walls and standalone bathtubs near a window to make it feel like a European spa.
Landscaping is especially important. Look for plants that make statements and that complement the home style. If you've got a Mediterranean or Spanish-styled building, lots of gravel with fragrant lavender, white roses and rosemary are perfect, especially punctuated by tall citrus trees or kumquats in large potted outdoor vessels. If selling a home with an office that has a separate entrance, landscape the porch or entrance in a way that's inspiring when people go to work.
And when you finally do put out a "For Sale by Owner" sign and host your first open house, don't forget to have cookies baking in the oven. Ah, the sweet smell of home.