Getting and remodeling a fixer-upper is one of the tried and true methods of creating equity in real estate. To make certain you make money on the investment, research home price differentials between homes of the identical dimensions, at the identical general place, that maintain most of their original features against houses that have been completely remodeled. Create a list of improvements you’d like to pursue and purchase them before you make a deal.
Worst House, Best Block
Keep in mind that real estate is all about location. Should you purchase a home that needs a lot of work on a block where all the houses require a good deal of work, the remodel just will not pay off. Buyers are not likely to pay top dollar to get a fixed-up home next to neighboring houses with flaking paint, decrepit measures or oil-stained driveways. Instead, buy the worst house. Such locations will already have a proven record of buyers ready to buy fixed-up homes at attractive rates.
Best Returns on Investment
Aim to get a home that seems bad but has updated systems: a modern furnace, aluminum pipes, circuit breakers rather than fuses and a newer roof. These features are expensive however, surprisingly, do not raise the value of property substantially. Buyers will look for them, however, so beginning with a property that includes one or a number of them are going to enable you to concentrate on making less-expensive improvements that return more on your investment. According to Remodeling Magazine’s annual survey, some of the simplest projects bring the best returns. Replacing the front entrance, for example, may bring a profit of 30 cents on the dollar past the price –a 130% return. A new coat of paint is always a fantastic investment. Best of all are houses that are structurally sound but only filthy. These may be sold at a gain with only a detailed cleaning.
Do Not Over-Improve
When you are attempting to find fixer-uppers to purchase, look at adjoining homes that have already been remodeled, and use them as your”template.” If neighboring homes have tiled kitchen counters, fiberglass bathtubs and linoleum bathroom flooring, it will likely not pay to install granite counters, aluminum bathtubs and Italian-marble flooring. Choose projects that will bring your fixer-upper in line with or just slightly above the criteria of neighboring houses.
Have a Back-Up Strategy
However well you have researched the marketplace or planned and executed remodeling work, at times the marketplace doesn’t cooperate. You don’t have control over market downturns, however you may have a backup plan to deal with them. If you live in the home yourself, plan on staying longer to ride out the recession. If you were planning on flipping it for a fast profit, be certain the rent you could garner would satisfy the carrying cost prior to purchasing. If it will not, you’ll be stuck with a reduction whether you keep it or sell.