What Is a fixer upper Property?
A fixer upper property is requiring refurbishment, remodeling, reconstruction or redesign. The property may need either minor or extensive repairs. A fixer upper often needs considerable work to make it a dwelling comfortable for living.
Fixer uppers are usually offered at a price lower than the market rate. This is because the buyer will have to invest time and money to restore the property.
Should you buy a Fixer upper?
Before you even start looking ask yourself these questions:
- Do I have the time to spend dealing with these types of properties?
- Do I have the money to spend fixing these types of properties?
- What experience do I have with these types of properties?
- Do I know the right professional to conduct the repairs?
- What repairers can I do myself?
Once you have the answers to these questions and you decided to go for it then you need to know how to purchase these properties.
How to purchase a Fixer upper property
Many people who buy fixer uppers purchase them because they can get a good deal. It is very appealing to be able to buy a property cheaply, make a few repairs and resell it for a higher price. However, some repairs simply enhance the look of the home but barely impact the value of the property. Other repairs significantly increase the value of a property. According to the National Association of Home Builders, remodeling investments should not raise the value of a home more than 10 to 15 percent above the median sale price of other homes in that area. Hiring a high experienced skilled professional real estate agent who has the full knowledge with these types of properties is a must. A highly skilled experienced real estate agent can save you making your first mistake telling you with the locations where you should not to buy those types of properties. Hiring a property inspector to guide you through the process of discerning repairs is a must! A property inspector can educate you on the condition of the property, what repairs should be made and the approximate cost of the repairs. An inspector can also inform you how long the appliances are expected to last before needing to be replaced.
Buying a fixer-upper is a whole new ballgame. Before you sign on the purchase contract, it’s important to find out and get as much information as you can about the property by asking the right questions. Who you need to ask and what.
Ask your real estate agent:
What are the neighborhood stats?
Will the remodel dollars needed to make this home livable work well with the neighborhood?
Is the home located in a historic district?
Ask your inspector:
What is the state of the home’s major systems?
what about the foundation, electrical, and plumbing systems?
What are the huge hidden expenses?
their advice can be worth their weight in gold.
Ask your contractor:
What is the total investment?
There are plenty of middle-road solutions that can satisfy your bottom line as well as a time commitment that’s comfortable. With that said, budgets and timelines may run over, so work with a reputable contractor to minimize the headache of living in a construction zone.
Fixer-uppers can be a great investment and allow you to customize a home to your specific needs. But it’s best to have a sense of what you’re signing up for! With some strategic due diligence upfront, you can purchase and remodel your new home with confidence.
- Favorable financing rates
- Equity appreciation
- Cash flow opportunities
- Tax advantages/ Depreciation tax shelter
- Higher income potential
- Lower vacancy risk/ Expenses paid by tenants
- Less competition
- More flexible sellers