Purchasing a home to flip or remodel as a fixer-upper can be a fantastic return on investment, but it also requires a lot of time and effort. Here are some tips and advice to take into account before going forward with a purchase of a fixer-upper.
When considering taking on a fixer-upper, look at neighborhoods that are desirable with high resale potential. There is no use in fixing up a house in a neighborhood that won’t get you a high return when you go to resell it.
Look for a house that has been on the market for several months. By this time, the seller probably just wants to sell it and you might have an accepted offer well under the asking price or at least have negotiating power.
Research the cost that will go into the fixing up to determine if you can afford the house and the materials/labor and to make sure it is worth it. Price things out and make a list of what exactly you will need.
Research what price you would resell the house for. Look at other properties in the neighborhood of similar square footage and upkeep. Take updates and improvements into account when coming up with this figure. The general range is between 20-30% above what you paid.
Avoid houses that require more than improvements and updates. Stay away from anything that has major structural or internal problems such as mold. You could be taking on more than you are expecting. Look for houses that need a “facelift” that requires things such as installing new appliances, counter tops, fresh paint, installing hardwood floors, etc. Avoid doing anything major like adding an addition, your time and cost could grow exponentially if your ideas are too grand.