The Browns Create Value in a Down Market

When Raymond Brown and his wife, Annie B., bought a vacation retreat home they call Woodpecker Haven, Raymond says, "I thought it was a done property. It was only five years old."

Annie B., though, viewed this house from a different perspective. As an interior designer with a forward-looking imagination, Annie B. merely admitted the home "had great potential." As Raymond tells the story, "Here are some of the improvements my enterprising wife accomplished to transform a livable property into an exquisite home":

♦ Landscaped the front and rear yards.

♦ Installed a drip irrigation system.


♦ Built a stone fence around the pool.

♦ Added decks around the rear of the house.

♦ Installed in both bedrooms French doors that led out to the decks.

♦ Remodeled the guest bedroom and bath to create a master bedroom for visitors.

♦ Built a fireplace, bookshelves, and cabinets and installed track lighting in the living room.

♦ Trimmed overgrown trees and shrubs to enhance a picture-perfect view from the front porch.

Although Raymond and Annie B. invested $75,000 in these and other improvements, they added around $175,000 in value—throughout a rapidly falling market. "We bought our Sonoma retreat," says Raymond, "just as home prices were peaking, and sold several years later, two months before market prices again turned up. . . . Yet we made a $100,000 profit. Our secret? Woodpecker Haven was a fixer-upper we renovated inside and out."

As the experience of the Browns shows, a fixer is any property that could look better, live better, and feel better than it does. (Remember, at the time they bought, Woodpecker Haven was only five years old. Recall, too, both the Browns and Pat Williams made their big gains in a falling market.) To fix up a property may require you to scrape encrusted bubble gum off floors and counters, patch holes in the roof, fight a gnarled mass of weeds and debris in the backyard, or pull out and replace rusted and obsolete kitchen and bathroom plumbing fixtures. But fixing up a property also should push you to visualize ways to redecorate, redesign, remodel, expand, or bring romance into the property.

In fact, to profit from fix-up work, you don't necessarily have to get your hands dirty. Yes, your sweat equity can pay big dividends, but creativity, imagination, and market research pay much better. To create value, you can (1) look for houses that obviously need work; (2) focus on properties whose creative possibilities would be overlooked by most buyers; or (3) find a property where you can improve both its physical condition and its overall appeal and liability. The better you can envision opportunities that other potential buyers are likely to pass up, the greater your profit.

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