Benefits of Buying a Fixer Upper House
While some may see trash, you see a diamond in the rough.
Perhaps you’re driving home from work and you notice an old house for sale in one of the neighborhoods that you usually pass through. Nothing exceptional, except for the price. You say to yourself that this house has a lot of potential and some work can turn this property into a gem that can give you a substantial profit. There are dozens of them right under your nose.
But before you make an offer on that property, it is a good idea to know the benefits of buying a fixer upper house and how to know if it’s the right move.
One of the chief advantages of fixer-uppers is that they are less expensive compared to other properties. Additionally, very few buyers are willing to buy these homes because they are not keen on investing in the time, money and energy to upgrade these. This means that competition will be fairly low and you are most likely to snatch it up.
For buyers looking for a place to reside in, a fixer-upper can be seen as a blank canvas that can be turned into a masterpiece that reflects your personal taste and style.
On the other hand, if you are keen on buying a fixer-upper and selling it for a profit after putting in some work, you will be rewarded with a substantial increase in value in just a brief period of time.
However, not all fixer-uppers are well worth your investment. How do you know if buying one is the right move?
Start off by doing the math. Have the home thoroughly evaluated so you will have a firm idea of the work required as well as the costs involved. Once you have arrived at a solid figure, the next thing that you need to do is figure out how much the property will be sold after you have renovated it. Deduct from that figure all the acquisition costs as well as all the expenses associated with the renovation. Deduct an additional five to 10 percent to cover for other unforeseen expenses. The final number you arrive at will be what you should offer the seller.
Next, have the property professionally evaluated. You should not expect the home to be in pristine condition. In an ideal scenario, the inspectors should be able to detect one or two serious problems. You can probably take that risk. However, if the inspection report says that there are serious structural problems, you should back off. The best fixer-uppers are those that only need cosmetic improvements.
If you are keen on investing in a fixer-upper, especially for profit, it certainly helps if you have DIY skills. This allows you not only to tackle several tasks that you need to undertake; more importantly, this will enable you to substantially reduce expenses and increase your potential profit.