Done right, investing in fixer uppers can be a realtor’s dream– buy low, spruce up the property, and sell high. What seems like a simple formula for profit, however, can quickly become a money pit if you dive into the project blind. Real estate investing experts suggest looking into four key factors to help you turn fixer uppers into a gold mine.
What is a fixer upper?
A type of real estate property, fixer upper houses require some form of work from aesthetic updates to complete renovations. These properties can be bought below market value then sold at a significant profit, making them a popular strategy for investors.
Unfortunately, simply buying fixer uppers is not a sure formula for success. Factors such as financing, the amount of structural work necessary, and choosing properties with strong potential ROI are essential to turning a profit on rehabilitating these homes. Otherwise, you stand to lose your investment if the fixer upper turns out to be a dead end. Before searching for such properties to invest in, it pays to do your research and create a realistic strategy.
4 Factors to Consider Before Investing in Fixer Uppers
If you want to start your real estate investing journey but have a limited budget, renovating a house in poor condition can be incredibly affordable compared to buying a newly-built home. Increase your chances of profiting from this approach by considering the following factors:
- Determining properties with excellent ROI
The very first step is to search for fixer upper houses with excellent potential ROI. It can be hard to find good options as an individual, so consider joining a real estate investors association to gain the advantage of a professional network. Aside from accessing insider tips on the best properties, you’ll also gain valuable advice on the most effective way to approach a fixer upper project.
- The amount of work that needs to be done
Most of your budget will go into structural renovations when you’re working with a fixer upper. Avoid blowing your budget with nasty surprises such as cracks in the foundation by hiring a property inspector to clarify the scope of renovation required. This will help you lay down projected costs and determine whether the project is right for you.
- The cost of permits
Aside from the renovation costs, you should also factor in what kind of permits the property requires. Inquire with your local government to make sure that all structural work is legal, and how much you’ll need to pay for the permits.
- Whether you should hire pros or go DIY
It might be tempting to DIY the work to save a bit more on the budget, but unless you’re confident with your skills, you might want to go with a seasoned contractor instead. Take time for a realistic comparison of both approaches before starting renovations, and consider elements such as equipment, timeline, and complexity of the work.
Start Investing in Real Estate Today
It takes time, money, and effort to successfully turn a fixer upper into a sweet deal, but it can be incredibly rewarding as well. With ample preparation and support from a real estate investment group, you can jumpstart your real estate career by investing in these potential-loaded properties.