Real Estate Investing Blog - DiscountedProperties.com

While many of the houses on the market have the potential to be profitable investments, you’ll make much more money if you concentrate your efforts on finding a fixer upper for sale. There are a couple of good reasons for this: Most people in the market for a home would rather buy something that doesn’t need work – and properties that need work are often owned by people with a shortage of extra cash.

If you purchase a fixer upper for sale, you can pretty regularly make some quick and easy repairs to the property and turn it for a quick profit. It may seem hard to believe, but a quick coat of paint, new carpet, and a thorough cleaning can add thousands of dollars to the value of a fixer upper for sale.

Since most people are looking for a home that’s in move-in condition, there’s less demand for a fixer upper for sale. Less demand means that anyone willing to take the time to make a few repairs can turn a little effort into thousands of dollars in extra profit.

By concentrating your efforts on the fixer upper for sale real estate investing market, you can also avoid paying real estate commissions in many cases. The reason? There are so many homes for sale that are ready to be lived in that a lot of real estate brokers will insist that repairs be made before they’ll consider listing a property.

This leaves the door to greater profitability wide open for an investor to pick up a fixer upper for sale without having to pay real estate commissions – which means even more money you can put in your pocket.

I know it can be really tempting to want to buy fixer upper homes. In today’s market especially when it is a buyer’s market more people who have some investment capital are looking to get into real estate. Real estate can be a lucrative investment if you know what you are doing but it can also spell disaster for someone who is not prepared and informed.

In today’s real estate crisis there is an abundance of homes that are empty and even more that are for sale due to foreclosure. But, you have to be careful when buying these homes because if they are fixer upper homes, you may be biting off more than you can chew. Many foreclosures and homes that have been empty for awhile will need some repair in order to get it livable again.

The advantage of fixer upper homes is that you can typically get into the house at a steal. You will likely pay well below typical market price. But, there’s a catch to that. The first thing you should do before buying fixer upper homes is to research, research, research! You need to know what typical homes in the area are selling for in prime condition. Find comparable homes that are not fixer upper homes and research their selling price in the market. This will give you a good basis for comparison.

Then, you will need to do a thorough inspection of the home and list everything you intend to do to move it from fixer upper homes to prime real estate. In order to do this you will need one of two things:

1. A lot of experience in construction to be able to effectively estimate the cost of all repairs and improvements or…

2. A solid, reliable contractor who will be able to get you a firm quote on all the necessary repairs and improvements on the house.

Once you have the price it will cost for the repairs, add in a cushion for unexpected contingencies plus an estimate for the time the home will be vacant and not generating income. Calculating these costs along with the asking price of the home will give you a good indication of what your net investment is going to be in the fixer upper homes. Is that less than the going rate of comparable homes in the area? Perfect, go for it! Is it more? You might want to rethink this particular property…or renegotiate the selling price.

So, let’s say you go through with the purchase of the fixer upper homes. You now have the task of putting into practice your research on the repairs, maintenance and improvements for the home. Keep in mind that the faster and more efficiently you get this done, the faster you can begin seeing a return on your investment. You can do this by renting out the house or flipping it to sell it at a profit. Beware, though of construction delays and those hidden problems that weren’t accounted for in the original bid.

If you know what you’re doing and have researched the area well, fixer upper homes can be a great investment.

Just be careful and good luck!