Buying a fixer-upper can be a fantastic investment. Fixer-uppers tend to be much more affordable than houses that aren’t in need of many renovations or repairs. The money you save should cover whatever repairs and renovations are needed — not to mention that you’ll be able to have more say in the look and design of the home since you’ll most likely be remodeling extensively.
Many buyers will purchase fixer-uppers with the intention of flipping them for a profit. However, not every fixer-upper is a great deal. If you’re not careful, you could end up with a money pit. You may end up pouring more money into a fixer-upper than you thought you might without the value of the house increasing accordingly, resulting in a loss. Fortunately, there are ways to avoid purchasing what ends up being a money pit.
The following are four things that you should look for when hunting for a fixer-upper to invest in.
- The location – Location, location, location as they say. If you’re going to invest in a dilapidated property, make sure it’s located in a neighborhood where it’s worth investing in. There’s no point in investing thousands of dollars fixing up a house in a neighborhood full of abandoned buildings and overcome by criminal activity. Guess what? It doesn’t matter how beautiful the house looks after renovations, no one is going to want to live there. If you’re going to buy a fixer-upper, make sure it’s in a neighborhood where the buyer demand is high.
- The floor plan – When checking out a fixer-upper, pay attention to the floor plan. If the kitchen is upstairs and the only bathroom in the house is in the basement, you’re going to have to do some serious remodeling in order to remedy this. When a floor plan is laid out like this (maybe not as drastically odd), odds are it won’t meet the needs of potential homebuyers if you are planning on flipping the house for a profit. You’re going to end up having to invest a ton of money into remodeling the house in order to change the floor plan – especially where plumbing is concerned. If the floor plan is this poor, it’s probably not worth it since the amount of money it will take to fix will probably negate any profit you might have made.
- The configuration – The number of bedroom and bathrooms matter. A three-bedroom and two-bathroom fixer-upper is going to be a lot easier to flip than a two-bedroom and one-bathroom house. Keep this in mind when looking at various fixer-uppers to invest in.
- The condition – Yes, the point of a fixer-upper is that you are buying a house that needs repairs. But that doesn’t mean the condition of the house doesn’t matter. There’s a big difference in buying a house that needs to be repainted and buying a house where the roof needs to be replaced. Certain repairs are going to cost way too much to make, making the low price of the house moot. There are three things you’ll want to look for in every fixer-upper that you consider – the foundation, the roof and the appliances. If any of these three things are in poor condition, odds are you’ll be better off not investing in that particular house.
If you are going to invest in a fixer-upper, whether it’s to flip the house for a profit, rent the house out or live in it yourself, make sure that you keep these four things in mind before you decide to buy.