Why You Should Invest in a Fixer-Upper

Posted by Leland On June - 10 - 2015 0 Comment

Fixer Upper House BeforeThere’s nothing wrong with buying a move-in-ready home. That’s convenient. Buying a fixer-upper, that’s another story.

If you’re really considering a fixer-upper, you may find yourself playing the pro and con game, and, much to your surprise, you may find that the pros outweigh the cons. Before investing in a fixer-upper, you should really ask if this lengthy mission is for you. Ask yourself:

  • Do you like to take on new projects?
  • Do you have a vision?
  • Are you patient?
  • And, most importantly, can you afford it?

Flip or FlopIf you’re in it to live in it, the home has to be for you. If you’re investing in fixer-uppers just to flip houses, then you’re in it for revenue. Take a look at HGTV’s Flip or Flop’s Tarek and Christina El Moussa, who flip houses professionally. It’s their job, and it makes them money. You have to have the skills, drive, and money in order to have a return on investment—if that’s what you’re going for. It goes without saying, many new-time renovators make mistakes when flipping a house. If you meet these problems, perhaps a fixer-upper isn’t for you. If it is, then here are the key benefits for why you should really consider a fixer-upper:

  • Lower price, make a profit. The price of the home in its condition will likely be more affordable than if you were to buy a move-in-ready home. These types of properties rarely list at full market price—which means, if you are considering flipping houses for simply a business strategy, you could be in the green when selling the house to a new homeowner.
  • Less competitors. Because buying a house that needs work proves to be less desirable than a brand new home, there will be fewer competitors interested in buying the home. It’s your opportunity to snatch a bargain without the pain of a bidding war.
  • Clean slate. An outdated home is like a blank canvas. Fixer-uppers can be reimagined and designed to look like brand new homes with modern touches. Fixer-uppers are for the creative minds that have the drive and skill.
  • Renovation Loans. The Federal Housing Administration’s 203k loans can provide homeowners with loans only for fixer-upper projects. These loans be specific for cosmetic improvements to extensive structural work needed for an outdated home.
  • Equity. This is the key component—quicker home equity. Renovating a home soon after purchasing it could increase the home’s value immensely, which is exactly the point of renovating an outdated home. As a result, this could raise your profit if you plan to turn around and sell the home back to a new homeowner as part of your business.

A fixer-upper is not for everyone. It requires time, patience, a well-thought-out budget, loans, expecting the unexpected, and so much more. It’s not for the absent-minded nor the impatient perfectionist. Troubles will arise when updating a home, so be prepared. Gear your mind towards the long run—home equity, profit, and increased value of living.

About the Author: Isabel is a guest contributor for Coldwell Banker – Hubbell Briarwood, specializing in property search in the Mid-Michigan area.

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