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Location Matters When Buying a Fixer Upper Home

October 17th, 2007    Subscribe To Our Feed

Most fixer upper homebuyers thought that they had acquired better value by purchasing a fixer upper home in a popular neighborhood. Although this is true, you should not dismiss the fact that it is possible to acquire a fixer upper in a less popular location that turns out to be a profitable investment. Buying this type of a home in a less popular neighborhood, however, isn’t for the inexperienced or those unwilling to take risks.

Purchasing a home that needs repairs and restoration in a less popular neighborhood is the work of a professional. The task usually entails serious structural problems and would need major work done to it. Because the fixer upper home is located in a less popular neighborhood, it takes the work of a professional to better understand exactly how much to invest to that there is the maximum return on the investment.

Why Popular Neighborhoods?

One of the most biggest reasons why some people fail to gain the profit they need after repairing and fixing up a home is that they don’t properly evaluate the location of the property. Every homebuyer should know that location is the mantra of buying homes. It makes up almost 40% of the value of the house.

The main point here is that people would love to live in a place where they can live a life that offers the conveniences that are important to them. For instance, one particular neighborhood is situated in a place with less or no traffic at all. It gains easy access to schools, business establishments, and other important institutions. The reason why it becomes so popular is that everything seems so convenient for its residents. They can have access to whatever they need.

If you will be buying a fixer upper home and want to gain greater profit, give thought to the location. Think about why such places become so popular and why others aren’t. So if have a choice between popular neighborhoods and less popular neighborhoods, choose the former.

How to Choose a Fixer Upper Home

July 7th, 2007    Subscribe To Our Feed

While buying a fixer upper home can save you a lot of money, that is only true if you know how to choose one. Following are some tips to help you find the right house to invest in.

Look for a Big Return on a Small Investment

A fixer upper is not a run-down home that needs a major overhaul. The best choice is one that needs only small repairs and improvements to significantly increase the property value. Do some research on curb appeal to discover what items to look for that can be easily fixed for little money.

Stay Under Your Budget

If you have ever done any remodeling, you know that there are always unforseen costs involved. Once you start tearing down and ripping up, you may find hidden problems that will require extra cost. By choosing a fixer upper whose initial cost and repair estimations are under your budget, you will come out ahead.

Write Down Everything That Needs to be Fixed

There are four areas that you want to consider - remodeling, renovating, refurbishing and repairs. Be as detailed as possible. Once your list is complete, groups them into those that must be done, those that might need to be done and those that can wait. Finally, rewrite the list in the order that you plan to accomplish them.

Get an Expert Opinion

Unless you’re a real estate expert yourself, it’s better to hire a qualified professional to investigate the house for needed repairs and renovations. Walk through the property with this person and ask questions as you go along. Have them provide you with a written list. Be sure to check the structure since problems are not always evident and reparis can be rather costly. You might even want to hire several professionals, each one for a specific aspect of the home.

Take Photos of the House

You can never be too sure that you haven’t overlooked anything about the house. And since you can’t bring your investment home, the next best thing to do is take as many photos as you can of each room of the house. Take at least four photos for every room (one for each side).  Remember to set the size of photos to its maximum capability. Take an extra memory card just in case you run out of memory. This way, you’ll be able to study each photo in detail at a later time. Get a friend to look over the photos with you. We often overlook things we ar accustomed to seeing. A new set of eyes may spot things you missed.

As you can tell, investing in a fixer upper home requires great caution. Thorough research and investigation are necessary to guarantee your investment brings you the highest return and provides you with a sound, comfortable home you can enjoy for many years.

The Basics of Investing in Fixer Upper Homes

July 3rd, 2007    Subscribe To Our Feed

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.

 

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