Investing in real estate can be a challenge, but from a monetary standpoint, it could be a great payoff. When searching for real estate – don’t leave out the fixer-uppers. Fixer-upper properties will give you more purchasing power when looking for a new home. Just think: you can get a property below market price, invest time and money with renovations, and end up with a house that is like new. Reductions can be found on homes that have been foreclosed, apprehended by the government, or just neglected by the previous owner. While it is true that you will save money initially, it is important to remember that these homes will need a lot of work. There are hidden expenses that purchasers fail to consider. Before you take the plunge, ask yourself if it is worth it and know your options.
Do the Math:
Figuring out what to pay for a fixer-upper starts with this simple equation:
Know what you are getting into:
Do not underestimate the costs of repairs and renovations. It is essential that the real estate contract includes an inspection clause. The inspection will point out additional problems you may have missed, or show what was believed to be a major problem could be a simple fix. It could also be added insurance to back out of the deal if needed.
If the house needs significant repairs, it may not be a good investment. Major repairs such as plumbing and electrical refurbishments, foundations upgrades, and major roof and wall work could be considered “invisible repairs.” This means that they rarely raise the value of the property and just add to the cost of renovation.
Minor renovations would be painting the inside and out, installing ceiling fans and light fixtures, replacing major appliances, and replacing carpets, windows and doors.
Ultimately, you need to decide how much money you are actually saving by buying a fixer-upper once you add in all of the costs. When the home is suitable to live in, will you be happy with your choice?
The process of fixing up the house may take longer than you originally planned. However, it can be well worth it! If you have not remodeled or dealt with minor repairs before, it will most likely take longer than expected. It takes time to give a house proper care so that it is comfortable for you to live in.
If you are ready to check out your options, click here to search for foreclosure properties on RuhlHomes.com. You should also contact a Ruhl&Ruhl sales associate for more details.
For more information on investing in real estate, visit RuhlHomes/investor.
- Add up the costs to renovate the property based on an assessment of the condition of the house. It is a good idea to be tough with this estimate, include all materials and labor – yours and outside contractors.
- Subtract that from the homes expected market value after renovation, drawn from comparable real estate prices in the neighborhood. Contact a real estate professional to help with these numbers.
- Deduct at least another 5 – 10 percent for extras you decide to add, unforeseen problems, and mishaps that need to be dealt with.
- What is left should be your offer.