What You Should Know Before Buying a Fixer Upper
For those looking to invest in property, a fixer-upper isn’t something that you should completely rule off the table. Depending on how much you have to work with and what you have to work with, as far as the state of a given property, the return on your investment once all is said and done can be quite lucrative.
Of course, this only works if the right things are wrong with a given property. In other words, not all fixer-uppers are created equal; some are simply not worth your time, effort or money. With the right project, though, the result can be well worth your while. So, let’s take a look at how you can tell whether or not a property is worth your investment or if you should continue searching:
- Price – If you’re looking at fixer-uppers, they should be listed at an appropriate “fixer-upper” price. But, as you evaluate the financials, be sure to do your homework before jumping on the property with the best price tag. You still need to take the time to look at what similar homes are selling for in the area, both in their current state as well as those that have been rehabbed. This will give you some sort of idea of how much money you may need to invest in a given property to bring it up to the neighborhood standard as well as where you should hit the brakes before you price out of the market with your upgrades (if you plan to sell). Remember, it doesn’t matter how much money you can invest in a property, as you’re ultimately limited by the market value of what surrounds the property.
- Assess Work – Your next step is to evaluate what improvements actually need to be done to a given property. The key here, though, is to invest in a fixer-upper that can offer instant equity. In other words, if you sold the home tomorrow, you’d be able to make your money back, whereas other projects would be instant money pits. Superficial elements like painting and landscaping, for example, can bring instant equity since these elements help form first impressions.
- Hire a Pro – Assess those projects which can add instant equity but require a professional. Trust us, the cost can be instantly worth it. Things like new roofing, new flooring and new insulation, for example, can all instantly and significantly add value to a property. So, don’t be afraid to bring in an expert for these dream equity builders.
- Patience – How are you at handling disruption? If your patience is shorter than your chosen property’s to-do list, then investing in a fixer-upper, whether you choose to DIY or hire seasoned professionals to handle the upgrades, just may not be a smart choice for you. Renovations take time and can often be disrupted and delayed for extended periods of time for any number of reasons. Just take a bathroom renovation, for example. Even if all goes well, it can still take a few weeks to complete. Do you have the appropriate temperament to see your entire rehab through?
With the right fixer-upper strategies, research, time and budget, a fixer-upper can be worth the investment. So, whether you’re in it to turn a neglected home into your personal dream home or looking to flip the property to make some money, you still have the satisfaction in knowing that all of that pay off came from your passion and hard work.