I don’t know about you, but I LOVE watching those HGTV shows, like Property Brothers, Flip This House or Rehab Addict, where they take run down properties, make them look beautiful and instantly turn a profit. But how realistic is that? Have you wondered whether you should invest in a fixer upper?
A fixer-upper is real estate in need of serious repairs. These properties are often called “handyman specials.” If you have the skill or the money to complete the repairs, you can often find great deals. Here are some dos and don’ts of buying fixer-upper real estate.
DO Get A Home Inspection
Fixer-upper homes need repairs. Some of these repairs, like broken floor tiles, are easy to see. Others, like water damage in the attic, can be easily hidden. The best way to know what you’re buying is to have the property inspected by a professional home inspector. However, there still may be hidden surprises not uncovered in an inspection.
DO Pay Attention ToThe Home’s Market Value
You don’t want to buy a house and spend your hard-earned money for repairs only to find out the home is worth less than what you paid for it. Have your agent complete a comparative market analysis so you know what the fixed up home will probably be worth.
DO Have An Estimate For Repairs
There’s no point buying a fixer if you can’t afford both the cost of the home and the repairs. Get an estimate from at least three contractors before you buy. Knowing the cost of repairs beforehand will help you make the best decision. It is still wise to set aside a contingency fund for unexpected repairs.
DON’T Think About Potential Profit
You’ve probably heard countless stories about people who bought fixers and sold them for outrageous profits. However, the reality is that most distressed homes are sold for a small profit or no profit.
DON’T Buy A Home Just Because The Price Is Low
When you buy a fixer-upper, you have to consider more than just the asking price. Add together the cost of repairs, insurance, and what you can realistically expect to make from the sale. This will tell you if the home really is a good investment for you.
DON’T Buy If You Don’t Have The Money
No matter how good a deal you find on a fixer, they aren’t worth it if they will stretch your budget too far. The last thing you want to deal with is damage to your credit score and the risk of foreclosure in the event you can’t pay for the home.
Not ALL fixed up houses are going to be flipped or resold
Many fixed up houses become the eventual home of the owner, and were purchased with that in mind, but a good number of them become rental properties, for the owner. As you can see there are plenty of options, or reasons for buying a fixer. So if you think you are up for it, give me a call. I can help you hunt down those great deals!