Low Cost Home

A fixer upper home is a house that has the potential for a higher market value given the right improvements. Not all homes that need repairs will give you a good return on your investment. To make sure you are making a good investment, you have to do your research first.

Generally, there are two kinds of fixer uppers: - major and minor. Minor fixer uppers are properties that require only cosmetic repairs such as paint and floor resurfacing. This project costs less and, therefore, increases your profit margin. It is also the kind of project that you can probably do by yourself.

Major fixer uppers will need repairs for the house’s physical structure. This could mean anything from plumbing to wall replacement. More often than not, these kinds of repairs will require professional services and perhaps some permits.

Now that you know what kind of fixer uppers there are, how do you go about investing in them? The first thing you should do is determine your goal for the project. If you plan on selling the property after you’ve fixed it up, then you are considering flipping. Another option is to make the repairs with the intention of maintaining the home as rental property. Finally, you may want to fix the place up for yourself. 

Flippers are bent on seeing an immediate return on their investment as soon as they close the sale. On the other hand, the return may not be as big as compared to what renting it may get over time.

Renters can afford to space out their profits over several years or so and because of that, they stand to profit more from their investment compared with flippers. Either option, though, will require you to consider three things when undertaking your fixer uppers investment:

Property market value  - know how much you can ask for the property after you’ve made all the improvements. This is basically assessing the potential selling price.

Repair costs –There are several financing options (credits cards, equity loans) depending on how much improvements and repair you intend to make. Consider whether you will do the repairs yourself or hire a contractor to do them for you.

Ownership price - In making your offer for the property, apply this formula: Take the potential selling price of the property after repairs and subtract repair costs and an additional 10% (as buffer for unforeseen costs). This will give you an idea of how much you should offer when buying the property.

These should get you started on your way to investing in fixer upper homes. The trick is to make the right improvements to raise the property’s value to a price that can fetch you a sizeable profit.

If you are new to buying fixer upper homes, be patient with yourself. It takes a while to learn all the ins and outs of identifying a property that is worth fixing up.

If you want to increase your chances of making a great deal the first time, you can watch Flip This House or visit Fixer Upper Fortunes.