Are you looking to invest in real estate? Buying a Fixer home can be the key to dramatically boosting your profits. Although acquiring this type of property always has risks, I will tell you more about it in this blog.
What is a fixer house?
First things first! You have to know what is a fixer-upper house. Fixer houses are distressed properties sold at a lower cost than their market value (much of the profit is here) because they require repairs or remodeling.
Here comes the tricky part, a fixer house could be a goldmine or a living hell for the investors. It all depends on a solid strategy and your preparation for the task. So, here are some hacks you can apply to succeed.
1. Hire a professional to evaluate the house
The most significant threat of investing in this type of house is the possibility of encountering severe and expensive damage. Detecting structural, plumbing, or electrical system problems could be difficult, so you should always hire a professional to thoroughly evaluate the house’s condition before making an offer.
2. Determine if a permit is required
Another constantly overlooked problem is the legal part regarding renovations or extensions.
Make sure you are aware of any permits that are required to start repairs or construction. Being unprepared for this aspect could bring down the entire project or generate expensive fines. So, be especially careful with this one!
3. Make sure you have enough time and cash
Keep in mind that you don’t profit from a fixer house overnight. An investment of this type requires money and much time to pay off.
Ensuring the best cost-benefit in this type of investment can take years. So you must arm yourself with a big budget and much patience.
These inversions are always long-term projects, so if you need an immediate cash flow, this type of investment may not be the right one for you. So think twice before making this long-term commitment.
4. Be prepared to go over budget
Fixing a house in lacking conditions is never easy, and unforeseen events will always happen. So the best thing you can do is calculate your budget considering a good percentage for contingencies. Consider this point when negotiating the property’s price; the higher your rate for contingencies, the better the chances to profit.
5. Identify what you can renew by yourself
Hiring a professional contractor can considerably increase your budget and reduce your profits. Evaluate what repair or remodeling projects you can do yourself and get to work.
Remember that the lower your investment, the higher your profit. Doing things yourself will surely take more time than depending 100% on a contractor. But remember that there are things we should always entrust to professionals.
Evaluate if the property will increase its value over time. In this case, you will win twice by letting the property acquire value and by saving workforce costs.
In conclusion, investing in a fixer house is risky. Still, it can bring you significant earnings if you play your cards right from the beginning and be patient enough to see the results.
Would you make such an investment? Tell me about it in the comment box!
