Buying a fixer-upper can be a great way to invest your money. Purchasing a fixer-upper can be a great way to get an affordable home compared to a new build. And the money you save from purchasing the home for a lower price should cover all updates, improvements, and reconstruction needed — not to mention that you’ll have more say in the design and look of your remodel.
The "Buy It, Fix It And Flip It" Fixer Upper
Many buyers buy fixer-uppers with the intent of flipping the property for great gain. However, not every fixer-upper is a great deal. You could end up in a money pit if you’re not careful. You may end up having a larger renovation costs than you budgeted. And if you are not able to fix the issues with the house your ability to add greater value to the home will diminish.
If you’re planning to invest in a fixer-upper, whether it’s to make your primary residence/forever home, to rent the house to tenants, or flip for a profit, make sure that you mindful of these five things before you decide to buy a fixer upper.
Location, Location, Location
If you’re planning to invest in a run down property, make sure it’s located in a neighborhood that’s a good investment. There is no real point in investing tens of thousands of dollars fixing in home renovations if homes and buildings are dilapidated. And the neighborhood is riddled with crime. The fixer upper home may be renovated beautifully, but it won’t matter because the neighborhood is unlivable and no one wants to move in.
I have experienced it first hand. I found a beautiful home online. It was located in the city of Oshawa and it was stunning. However, when I searched the address of the property, I knew the something was amiss.
The home itself was beautiful, but it was located about 200 yards away from a major highway and busy intersection. The surrounding homes in the neighborhood were totally run down as a result of its unfavorable proximity. When I researched at some of the comparable homes for sale in the neighborhood, I noticed that they were significantly less than the asking price of the investor’s property.
If you’re planning to buy a fixer-upper, make sure it’s in the right location where the buyer demand for homes in the neighborhood is high. And don’t purchase the highest priced home on the block, because your house’s market value will be driven down to match the values of the homes in the neighborhood. And in this case, it continues to drop the value of the price down and the home is continuing to sit on the market — making that major renovation in the investment property, a poor decision.
There’s an old adage in real estate, “It’s better to have the worst home in the best area, than the best home in the worst area.” Basically, you can always improve the home and get the benefit of the neighborhood.
Floor Plan
When searching for a fixer upper homes, you need pay attention to the floor plan. If there are only one full bathroom for a three bedroom home on the first floor and all the bedrooms are upstairs. Or the kitchen is on the second floor of the house, you’ll have to do some serious remodeling to remedy this. When a floor plan of the fixer upper’s homes is laid out like this (maybe not as peculiar), odds are it won’t meet the potential home buyers need and you will not make a good profit off the investment property. You’re going to end up having to hire contractors to remodel the house in order to change the floor plan – for the most part where plumbing and electrical systems is concerned. If the floor plan is this poorly designed, it’s probably not ideal fixer upper because the heavy investment in remodeling the floor will wipe any profits to be made in selling of the fixer upper.
The Layout
The amount of bedrooms and bathrooms in the fixer upper home matters. It can be the biggest deal-breaker for all buyers. Fixer-upper houses that are 3 bed and 3 bath are going to be a lot easier to sell compare to 2 bed and 1 bath. Be mindful of this when trying to find fixer-upper homes to invest in.
Condition Of The Home
The more run down the home is the better, Right? I get it. The purpose of a fixer-upper is that you are purchasing a house for a cheaper market value and needs renovation. But it doesn’t mean the condition of the fixer upper house doesn’t matter. There’s a big difference between buying a home that needs simple repairs like repainting the interior or fixing broken windows and replacing the whole roof or completely replacing the HVAC systems. Major repairs to the home can make the low price purchase completely irrelevant.
What To Look For In Buying A Fixer Upper
Make sure you look at these three things to look for in every fixer-upper that you consider
The condition of the foundation
The condition of the roof
The appliances, water heater, HVAC systems
If any one of these items need major repair, there is a higher likelihood that you’ll be better off not investing in that fixer upper house. Make sure you hire a qualified home inspector and make sure the home has a roof certification, sewer lines inspection, pest inspection, home warranty, and engineering report.
. I enjoy spending my time at Sunday hockey at Mt. Joy and Centennial arenas. I currently live in the Bullock neighborhood with my wife where we enjoy entertain friends and family and spending time outdoors. I’m also passionate about serving the Markham community, and look forward to connecting with you! See you around town!
Robert Atkinson [email protected] | 416-998-8853.
